UCLA Anderson Forecast: No recession yet and California’s economy will outperform the nation
John Lewis-class fleet oilers are being built at NASSCO as California’s defense sector grows. Courtesy of the shipyard
The latest UCLA Anderson forecast, released Wednesday, concludes that the US economy is not in recession and that California continues to grow faster than the country, but warns that aggressive monetary policies will quickly change the situation could.
“As core inflation slowly eases, it’s possible the Fed will tighten further until we’re in a recession,” the widely followed quarterly forecast warned.
The forecast presented two scenarios for the US and California economies. Forecast director Jerry Nickelsburg warned that this is not about “choosing your own forecast” but about acknowledging the “unknown impact of aggressive and potentially prolonged rate hikes by policymakers.”
Whatever happens, forecasters expect a milder impact on the California economy.
“The good news is that, in contrast to the past four slowdowns in economic growth, we expect a milder impact on the California economy, regardless of which direction Federal Reserve policy actions take the U.S. economy,” the forecast said.
When a recession hits, the California economy declines, but to a lesser extent than the US economy. In this scenario, the unemployment rates for 2023, 2024 and 2025 are projected to be 4.4%, 4.8% and 4.6%, respectively.
The effects of a recession in California are being mitigated by more construction, a generous contingency fund for the state government, increased demand for defense manufacturing, and increased demand for labor-saving equipment and software.
Recession or not, forecasters expect California’s economy to “continue to grow and grow faster than the country’s.”
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