The UCLA Anderson School of Management said March 16 that the U.S. economy has entered its first recession in 11 years, and is likely to be a bit more severe in California than the rest of the nation.
The new report said California is expected to lose more than 280,000 payroll jobs by the first quarter of next year. About a third of those jobs would be in hospitality, leisure, transportation and warehousing.
“For California, a state with a larger proportion of economic activity in tourism and trans-Pacific transportation, the economic downturn will be slightly more severe,” the report said.
“If the pandemic is much worse than assumed, this forecast will be too optimistic,” the UCLA report said. “If the pandemic abates quickly because of the extraordinary measures being put into place to address it, an outcome that the medical community thinks unlikely but possible, then the forecast is too pessimistic and economic growth in the third and fourth quarters of the year will be higher.”
The forecast predicts a gross domestic product second-quarter decline of 6.5 percent and the third-quarter drop at 1.9 percent. Two quarters of declining GDP is considered a recession.
The report said GDP will have declined by 0.4 percent by the end of this year. “In 2021, with the abatement of governmental pandemic expenditures and the continued contraction of residential and commercial construction, the economy is forecast to grow at only 1.5 percent,” the report said. “The full recovery and return to trend (are) now expected in 2022.”
Posted March 16, 2020.