Amid a recession that has continued to plague the nation, a team of economists at the UCLA Anderson School of Management is predicting the harrowing effects of our economic downturn will slowly fade, although significant progress is unlikely to be noticeable until 2012.
The persisting problem was that consumers were spending money that they would never receive, particularly when buying houses in anticipation that their values would increase, said Edward Leamer, director of the UCLA Anderson Forecast.
Now that consumers are finding out they are actually less wealthy than anticipated, they are attempting to rebuild their assets by saving, he said. It is critical that people continue to save, he added.
Released to the public on Sept. 15, the forecast provides a quarterly economic prediction for the nation and for California.
According to the forecast, the second financial quarter this year showed very slow growth in gross domestic product. The team expects growth will continue to occur at a slow rate of 1.4 percent for this quarter, then grow rapidly at 2 percent for the subsequent two quarters.
Growth in the GDP is a good sign because it also means the economy itself is growing, said economist Julia Thornton Snider.
The higher the GDP, the greater the value of all the goods and services produced in a certain geographic area.
The team does not expect a return to a 3 percent growth rate until 2011 because of the uncertain future of the economy. But according to the report, the economy will heal itself in time, growth will resume, and unemployment will decrease.
The forecast also revealed that unemployment numbers would continue to remain extremely high. The unemployment rate at the end of this year will be 9.7 percent, while the rate for 2011 is expected to be 9.5 percent.
Regardless of the harsh reality these statistics bring forth, recent college graduates and current students should not be discouraged by the unemployment rate, Snider said.
“Your college education is for a reason,” Snider said.
She also recommended that students work on developing a good resume through internships and the maintenance of connections with people who are currently working in the fields in which they are interested.
Leamer said despite the state of the economy, it is critical to maintain the creative and problem-solving skills that jobs require and computers will never be able to have.
The Anderson forecast team first began its work in 1952 solely forecasting for the United States, said Patricia Nomura, associate director of the forecast.
Most of the data that the forecast team uses as a basis for their analysis comes from government websites such as the U.S. Bureau of Labor Statistics, Leamer said.
The data is refreshed one to two times during the month, so the forecast is always grounded in the most up-to-date material. It was not until the 1960s that the forecast team began releasing forecasts specifically for California and for different regions throughout the state.
Each time a forecast is released, the team holds a conference that is open to the public for an entrance fee, and forecast books are available for purchase.