Economists for the UCLA Anderson Forecast issued Wednesday a
less-than-optimistic quarterly prediction for economic conditions
to come despite talk in recent weeks that economies on both local
and state levels are on the rebound.
But while Forecast Director Edward Leamer and Senior Economist
Tom Lieser both warned that state and national economies would take
more time to recover, senior economist Chris Thornberg offered a
positive outlook on the economies of Los Angeles and Orange
counties.
The announcements were made as part of a quarterly conference
for the Anderson Forecast, which included a speech from Chancellor
Albert Carnesale outlining the importance of UCLA to the
surrounding community and economy.
Leamer said the national economy will grow at approximately 2.5
percent next financial quarter, in contrast to figures around the
4.5 percent mark put forward by analysts on Wall Street.
Leamer said normal economic conditions are defined by a 3
percent growth rate.
“Analysts feel optimistic that there will be supernormal
growth, but I don’t think the economy is healthy,” he
said.
Leamer suggested analysts are basing their predictions on
somewhat positive figures this quarter, which demonstrated a 3.1
percent increase in real gross domestic product.
Increased defense spending and positive but volatile consumption
of durable goods make up a large portion of this figure, Leamer
said, therefore not providing accurate evidence that recovery is on
its way.
Due to the abnormal nature of the recession experienced
nationwide, Leamer said the U.S. economy will “not experience
supernormal growth but will just return to a normal growth
rate” on its path to stability.
Leamer also added that tax cuts implemented by President George
W. Bush will have little impact on stimulating spending.
In his state forecast, Lieser said a recovery for the California
economy was in its early stages, but no real improvement will be
felt until late 2004 or early 2005.
“I can see the light at the end of the tunnel, but the
tunnel just got longer,” Lieser said.
Lieser said recovery in state sales, production and profits is
still in an early phase.
Short-term predictions by Lieser included steady increases in
personal income, sales and non-farm employment into fiscal year
2004-2005.
Lieser said sectors showing serious improvement in figures
include semiconductor sales and agri-business exports.
The forecast did offer positive sentiment for local economies in
southern California, with Thornberg foreseeing job growth in the
greater Los Angeles region as leading the nation.
“There are solid signs of growth in the Los Angeles and
Orange county economies,” he said, predicting Los Angeles
County services and trade sectors to lead the way.
Thornberg said southern California will recover quicker than
other parts of the state due to a more mild exposure to the
technology bust.
Strong internal demand for goods and services will also help
fuel a return to normal economic conditions, he added.
In a keynote address, Carnesale commented on the effects of
further cuts to be made to the UC system as part of the 2003-2004
state budget.
He said fund-raising will play an enormous part in helping UCLA
retain the best students, teachers and researchers when resources
are low and competition with private universities is
increasing.