• Print

    California Unemployment to Remain High through 2013

    Jul 29, 2011

    There is little change to the forecast of a slow recovery that will keep California's unemployment rate at or above 10% through the end of 2013 according to the Business Forecasting Center at the University of the Pacific. Strong growth in the technology sector is driving an improved outlook for state revenue. However, construction, real estate and finance continue to disappoint already low expectations.

    In addition to technology, other export-oriented sectors such as agriculture and tourism are also recovering well. Despite widespread improvement in its mainstay agriculture industry, unemployment rates across the San Joaquin Valley remain near the record highs of 2010.

    "Local governments, schools and real estate remain depressed," said Jeff Michael, Director of the Forecasting Center, "and those are the sectors that drive the middle class and consumer spending in the Central Valley."

    Over the next four years, the forecast projects annual job growth in California between 1.6% and 2.0%, and gross state product will expand between 2.7% and 3.2% per year. At these modest rates, it will take until late 2015 to recover peak employment levels of 2007 and even longer for the hardest hit inland areas.

    The Business Forecasting Center at the University of the Pacific was founded in 2004. Housed in the Eberhardt School of Business, the Center produces quarterly economic forecasts of California and 10 metropolitan areas in Northern and Central California. The Eberhardt School of Business is one of a handful of Business schools producing comprehensive quarterly forecasts of the California economy, and includes several regions not covered by other forecasts. In addition to the Quarterly Forecasts, the Center produces in depth studies of regional issues, and offers custom economic research services to public and private sector clients. For more information, visit http://forecast.pacific.edu/.

     

    ### 

     

    California Annual Forecast Summary

     

     

     

    2010

    2011

    2012

    2013

    2014

    2015

    Real Gross State Product (% change)

    3.0

    3.0

    2.7

    2.8

    3.2

    3.2

    Non-Farm Payroll Employment (% change)

    -1.3

    1.3

    1.6

    2.0

    1.9

    1.8

    Unemployment Rate (%)

    12.4

    11.8

    11.3

    10.7

    9.5

    8.7

    Housing Starts (thousands)

    39.4

    45.6

    74.0

    111.0

    141.8

    158.9

     

    Central Valley Metro Forecast Summary

     

    Metro Area

    Nonfarm Payroll Employment

    Unemployment Rate (%)

     

    (% change)

     

    2010

    2011

    2012

    2013

    2014

    2010

    2011

    2012

    2013

    2014

     

    Sacramento

    -2.9

    -1.3

    1.3

    2.3

    2.3

    12.5

    12.1

    12.0

    11.8

    11.0

     

    Stockton

    -2.8

    -1.1

    1.6

    2.3

    2.2

    17.3

    16.6

    16.0

    15.3

    14.0

     

    Modesto

    -1.0

    -0.8

    1.7

    2.2

    2.0

    17.6

    16.5

    16.1

    15.7

    14.7

     

    Merced

    0.2

    1.7

    1.8

    2.3

    2.3

    19.2

    18.2

    18.0

    17.5

    16.7

     

    Fresno

    -2.3

    0.5

    1.4

    2.1

    1.9

    16.8

    15.7

    15.3

    14.7

    13.8

     

    California

    -1.3

    1.3

    1.6

    2.0

    1.9

    12.4

    11.8

    11.3

    10.7

    9.5

     

    Sacramento MSA includes Sacramento, El Dorado, Placer, and Yolo counties. Stockton, Merced, Fresno and Modesto MSAs correspond to San Joaquin, Merced, Fresno and Stanislaus counties.

     

    Bay Area Metro Forecast Summary

    Metro Area

    Nonfarm Payroll Employment

    Unemployment Rate (%)

     

    (% change)

     

    2010

    2011

    2012

    2013

    2014

    2010

    2011

    2012

    2013

    2014

     

    San Francisco

    -1.0

    0.4

    1.5

    1.8

    1.7

    9.1

    8.3

    7.9

    7.4

    6.4

     

    San Jose

    -0.4

    2.1

    2.3

    2.4

    2.0

    11.3

    10.0

    9.3

    8.5

    7.2

     

    Oakland

    -2.0

    -0.2

    1.9

    2.3

    2.1

    11.3

    10.5

    10.1

    9.6

    8.5

     

    Santa Cruz

    -2.7

    2.9

    1.4

    1.8

    1.8

    12.8

    12.0

    11.7

    11.1

    10.6

     

    Vallejo

    -0.9

    -0.1

    1.7

    2.3

    2.3

    12.0

    11.6

    11.3

    10.8

    10.0

     

    California

    -1.3

    1.3

    1.6

    2.0

    1.9

    12.4

    11.8

    11.3

    10.7

    9.5

     

    San Francisco MSA includes San Francisco, Marin and San Mateo counties. Oakland MSA includes Contra Costa and Alameda counties. San Jose MSA includes Santa Clara and San Benito counties. Vallejo and Santa Cruz MSAs correspond to Solano and Santa Cruz counties.

     

     

     

     


    Highlights of the July 2011 California Forecast

    • California remains in the early stages of a long, slow five year recovery.

    •· California unemployment will decrease slowly over the next few years, dropping below 12% during the second quarter of 2011 and remaining above 10% through 2013.

    • Payroll jobs bottomed out this summer nearly 1.33 million jobs below their 15.2 million job peak in summer 2007. California will add 202,000 jobs over the next 12 months; less than one-sixth the total lost. Jobs will not recover their pre-recession peak until the end of 2015.
    • Despite sluggish job creation, real personal income is expected to approach and exceed its 2007 peak in the first half of 2012 due to faster recovery in non-wage income.
    • After 8 years of zero net job growth from 2007 through 2015, the state's population will have grown by 3.3 million people, keeping unemployment above 8.5% in 2015.
    • Growth in real gross state product is expected to stabilize at about 3% per annum through 2015.
    • 210,600 new Construction jobs are expected to be created over the next four years, making up almost 16% of California's total nonfarm job growth and is anticipated to be the fastest growing sector in 2013. This growth, however, will recover just 54% of the construction jobs lost since the peak in winter of 2006.
    • 2010 brought the first annual increase in Manufacturing jobs in California in a decade. The trend of gradual manufacturing growth is anticipated to continue in the future.
    • The Health Services sector was the only private sector to experience consistent job growth throughout the recession, adding 71,300 jobs between 2008 and 2010. It is expected to add another 126,000 jobs over the next four years, almost 10.5% of California's total non-farm job growth.
    • Professional Science & Technology jobs are projected to increase by 24,900 (2.4%) over the next year after adding 27,300 jobs in 2010.
    • State and local government employment, including public schools, shrank by 57,000 jobs in 2010 and will shrink by another 28,000 in 2011.
    • Multi-family housing starts are expected to rebound modestly in 2011, while starts of more economically significant single-family homes remain in a depressed state. Housing starts should top 150,000 units per year by 2015, but include more multi-family housing units than in recent decades.