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THE REGIONAL ECONOMY UNDER PRESSURE : UCLA Group Again Lowers State Growth Predictions : Employment: The widely watched quarterly report says California is in for a 'rocky ride' amid a national slowdown.


Against a backdrop of fears that the nation's economy is slipping into recession, UCLA forecasters are halving their predictions for the state's job growth from their forecast of six months ago.

The widely watched quarterly report from the UCLA Business Forecasting Project, which will be released today, will forecast California job growth of just 1.8% in 1995, 1.7% in 1996 and 2.8% in 1997. That will be a change from a March forecast of 2.1% job growth in 1995, which itself was a revision downward from a December forecast of 3.5%.

The drop this time around is attributable to the "pronounced slowdown in the national economy, which will give California a rocky ride for several quarters," UCLA's head forecaster, Larry J. Kimbell, and economist Tom K. Lieser write. The state's housing sector has also failed to recover as hoped, Kimbell said.

Even so, the state's job growth could eventually outpace the nation by 1997, Kimbell said. "'We are predicting . . . that the U.S. is slowing dramatically, and California is still predicted to accelerate," he said.


Nationally, the UCLA forecasters are joining a chorus of economists saying that a modest recovery will continue but that it would not take much to tilt back into recession.

UCLA's forecast will also follow a report Tuesday that lower mortgage interest rates failed to jump-start the national housing market last month, with the Commerce Department reporting that May construction of single-family homes and apartments fell 1.3% to a seasonally adjusted 1.24 million annual rate, the fourth decline in five months.

UCLA now predicts growth in the nation's real gross domestic product of 2.7% in 1995, 2.4% in '96 and 3.5% in '97. That would follow robust growth of 4.1% last year.

In terms of jobs, UCLA predicts 2.1% job growth nationally this year and 1.7% in 1996. That would be the first time since the onset of recession in 1990 that the state growth rate has caught up with the national rate. In 1997, the U.S. rate would be 2.4%.

UCLA's forecasts are in keeping with other predictions. First Interstate Bank is planning to downgrade its April forecast for the national economy in light of the weaker-than-expected second quarter, senior economist Kenneth Ackbarali said. In April, the bank forecast annual growth for the nation of 3.2% in 1995 and 2.2% in '96.


First Interstate is not going to revise its state forecast, which predicts 1.6% growth in 1995 and 2.3% growth in '96.

Other UCLA predictions:

* California non-farm employment will grow by 800,000 jobs from 1995 to 1997, with more than 350,000 of that in 1997. The total growth figure is 80,000 fewer jobs than the March prediction.

* The fastest-growing categories will be in the service sector, including the high-paying movie and professional services industries.

* Construction jobs have been growing in the first half of 1995 but are expected to slow in the second half. However, construction should add 63,000 new jobs over three years.

* Durable goods manufacturing, excluding aerospace, is expected to remain stable through 1997. Aerospace employment losses will continue but at a slowing pace, with losses of 22,000 in 1995, 9,000 in '96 and 8,000 in '97.

* Non-durable goods manufacturing will show modest job gains through the period.



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