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UCLA economists predict that the coronavirus pandemic will plunge the United States into a “depression-like crisis,” and California employment levels will not return to normal in years.
According to the UCLA Anderson Economic Forecast Posted Wednesday: “For too many workers, the recession will last well beyond the official end date.”
While economists expected a V-shaped recovery, with a sharp recession followed by an equally abrupt pullback, the UCLA report anticipates a recovery more similar to Nike’s, with a sharp 42% drop in GDP followed by gradual growth of employment out over the years.
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The retail and leisure and hospitality sectors have suffered most of the layoffs so far. With tourism reduced and consumers fearful of reverting to old habits, many companies will close forever and others will limp with fewer workers.
UCLA economist Jerry Nickelsburg said Californians working in those fields may take longer to recover.
“Those two sectors are low-income sectors,” said Nickelsburg. “So it creates an additional problem in the sense that these are the people who are least able to survive without suffering much.”
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LA County unemployment rate It is currently close to 21%. Nickelsburg predicts that hiring will start to pick up, with faster job growth in the California tech industry as people rely on new digital tools to work and socialize. But by 2022, California’s overall unemployment rate will remain significantly higher than pre-pandemic levels: 6.8%, according to the forecast.
California home construction is forecast to decline by 17.3% this year. Nickelsburg said there really is no chance for developers to build enough homes to ease the state’s affordability crisis. However, less migration to California could ease some of the upward pressure on rents and house prices.
One caveat: UCLA’s perspective assumes that the pandemic will begin to lessen this summer, and that new waves of infection will not lead to more blockages.
“If that assumption is too optimistic, so is our forecast,” said Nickelsburg.