The deepening economic crisis is expected to intensify throughout 2009 and into ’10, the UCSB Economic Forecast Project announced yesterday.
According to Bill Watkins, executive director of the EFP, nearly all sectors of the U.S. and California economy will experience negative growth in the foreseeable future. Watkins predicts the national unemployment rate could rise to as much as 9.2 percent by the beginning of 2010 – a bleak prediction for graduating students entering the workforce in the next few years.
“It is now uncontroversial that California is in a recession,” Watkins said. “[California] has been much harder hit by the real estate collapse than have most other states. It started losing jobs before the United States began losing jobs. Its output began declining before that of the United States.”
Along with unemployment, the EFP predicted that the number of retail sales and the average price of housing would both fall throughout ’09. Additionally, domestic migration to California is expected to drop.
Despite the report’s data, Watkins said the economic forecast was only a projection, not a statement of certainty.
The EFP predicts that the gross domestic product of California will continue to decrease over the next several years by as much as 5 percent from 2008 levels. By 2009, unemployment is also expected to be as high as 11 percent – more than the national average.
Along with an increase in unemployment, the EFP expects the average income of those with jobs will decrease. For the second quarter of 2009, the report says the average income will have decreased by more than 3.5 percent.
Despite a predicted decline in GDP over the next few years, GDP is expected to rebound by the year 2011. In addition, the EFP’s findings show that some parts of California have been surprisingly resilient to the bad economy. Watkins said California’s Bay Area is doing better than most parts of the country, a statistic he attributes to the biotechnology industry in the region.
Chancellor Henry T. Yang, who attended the EFP’s meeting, said the report is a useful tool in interpreting the severity of the current economic crisis facing the state.
“In today’s challenging economic times … we need wisdom,” Yang said.