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California economy will pick up speed

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POSTED June 20, 2012 8:39 p.m.

 

LOS ANGELES (AP) — California will make steady gains in employment and its jobless rate will dip below double digits next year as the housing market finally halts its plunge, UCLA forecasters said Wednesday.

The state added 34,000 new jobs in May but its unemployment rate will remain around 10.6 percent through 2012, according to the quarterly UCLA Anderson Forecast. That will drop to an average of 9.7 percent in 2013 and dip to 8.3 percent in 2014, forecasters said.

Those figures are far higher than the nation's unemployment rate, projected to be 8.2 percent this year and 7.9 percent in 2013. The U.S. economy will remain weak for years, the forecast said.

That will contrast to California's economy, which forecasters said will gain speed in the next two years.

It could take seven or eight years for the U.S. to recover all the jobs that it lost during the 2008-2009 recession, forecast Director Ed Leamer wrote.

America's educational system must do better if it wants to compete in a global market where many jobs have been automated or moved overseas, Leamer wrote.

"Good jobs in the United States in the 21st century will require humans to do things that are not suited to the capabilities of faraway foreigners, robots or microprocessors," he wrote. "We need a workforce that can think creatively and solve the new problems, not merely recall the solutions to old problems."

California's housing market remains a drag on the state economy but it may recover more quickly than the U.S. market as a whole, forecasters said.

The real estate market is either "still in the trough or still declining," forecast Senior Economist Jerry Nickelsburg said.

"While there is some data giving rise to optimism, there is no real indication that the housing market is on the cusp of a recovery," he said.

However, California's housing market could recover in the next two years, with building permits reaching 130,000 permits in 2014, or double the U.S. rate, Nickelsburg said.

Multifamily housing will be popular as people unable to afford to buy homes choose to rent, he said.

Nationally, the percentage of people owning homes will keep falling, from a peak of 69 percent in 2004 to 65 percent by the end of the year, but the rate of foreclosures appears to have peaked and sales of existing homes are on the rise, forecast Senior Economist David Shulman said.

 

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