By Beacon Economics
State labor market ‘finally beginning a slow thaw;’ U.S. economic ‘doldrums’ to end in 2011
California’s unemployment rate will remain above 12 percent through the first half of 2011 and won’t dip below 10 percent before the end of 2012.
The labor markets are finally beginning a slow thaw. Total nonfarm employment will continue to grow at an annualized rate of 1.5 percent over the next year and will gain steam in 2012 as the growth rate rises to 2.7 percent.
However, it will be well into 2015 before California reaches the peak of 15.2 million jobs before the recession.
California’s economic recovery is well underway. The “man on the street” might tell you differently, as businesses and residents are not yet feeling much relief.
Still, personal income has increased, and California consumers continue to gain steam with nearly one and one-half years of consistent growth. The state’s housing market remains depressed as the mortgage industry continues to work through its monumental problems.
However, Beacon Economics does see growth on California’s real estate horizon once jobs and households begin to grow again.
U.S. economic growth to average 3 percent in 2011, 4 percent in 2012
Beacon Economics has improved its short term outlook for growth in the U.S. economy. We expect the doldrums that have defined the recovery to finally come to an end. Growth in 2011 will average more than 3 percent and accelerate throughout the year.
Indeed, the U.S. could end up seeing rates of growth close to 4 percent in 2012. As growth picks up, the unemployment rate will finally begin to fall at at reasonable pace to under 8 percent by mid-2012.
But remember, all of this is largely the result of monetary and fiscal policy. The Obama Administration and Federal Reserve have made policy choices that are spurring growth in the here and now.
How much will it cost us in the future? If we’re lucky, it will be reasonably cheap and well worth the price.
If we’re unlucky, the U.S. could end up in a worse situation than the one that caused our leaders to take this gamble in the first place. That means either rampant inflation or a crisis in the public debt markets.
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