UCLA Anderson report downgrades California outlook
In June, UCLA economists predicted a serious boom in economic growth in the United States and California. Three months later, their outlook for nation and state looked much less optimistic in a new report, which attributed the change to a plateau in vaccination rates and the impact of the delta variant.
“Consumer prudence and supply constraints mean that what could have been a few years of successful economic growth looks more like years of good, solid, but not spectacular growth,” the UCLA Anderson Forecast of September 2021 concluded. .
Economists have also warned of a state becoming increasingly unequal as tech entrepreneurs see their personal wealth rise while low-income residents see no gains.
“A striking aspect of the recession and the recovery is how it has disproportionately affected low-income Californians,” forecast manager Jerry Nickelsburg wrote in an analysis of the results. “Thus, this created an increase in inequality in the state.”
Nickelsburg predicted that housing demand and low interest rates would fuel a “relatively rapid return in residential construction,” but there was no indication the boost would come close to addressing the state’s housing crisis . “Our expectation is 123,000 net new units in 2021 and continues to grow to reach 139,000 by 2023,” Nickelsburg said. over the next three years is zero. “
UCLA economist William Yu delved into income inequality in a companion report that explored COVID-19 and inequality in greater Los Angeles. The region has seen the second biggest job loss since the start of the pandemic, led only by North Bay. And in Los Angeles, “low-wage jobs, especially in restaurants, suffered more job losses than other industries,” Yu said.
“So while we have heard of this so-called K-shaped recovery, it does mean that these high-wage industries – which were doing very well before the pandemic – are also doing very well in the recovery, as opposed to the low wages They have experienced a slower recovery, ”Yu said.
Compared to the state, Yu also says that “LA’s growth has been slower.” The economist pointed to two causes of the apparent gap, including that the “strong growth engines of the California economy” in the San Francisco Bay Area (aka the tech giants) are providing “a boost. to all of California “. Another factor is the high cost of living in cities like LA
“Compared to a mature metro like Los Angeles, Inland Empire has been doing well in recent years, in terms of jobs, recovery growth and housing. One reason is the relatively lower cost of living, so you see a lot of people moving to these kind of inland and cheaper areas to have a bigger house, ”Yu added.
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