NO, California nor the USA is in a recession… according to this recent article from the UCLA Anderson Forecast.
UCLA Anderson Forecast economists Ryan Ratcliff and Jerry Nickelsburg look back at the California economy since World War II and come to two conclusions. First, the U.S. and California economies move together — there has never been a recession in California without a national recession. Second, the California recessions have twice been amplified and extended by long-lasting structural adjustments — the Southern California aerospace contraction in 1990 and the Northern California tech bust in 2001. The recession-only downturns have been sharp-but-short contractions driven by temporary job losses in manufacturing and construction. These recessions typically last less than a year, but both the aerospace and the tech adjustments took more than half-a-dozen years to complete.
Today’s economy fits neither of these patterns; our economy is in “uncharted waters,” they say. There are some negative signs, such as job loss in real estate-related sectors, but it is unlikely that these sectors can create enough job loss to generate the 2 to 3 percent declines in non-farm payroll employment that have characterized past recessions.
The forecast is for a very weak California economy in 2008. The “double-whammy” of construction and financial activities job loss will continue to drag at the economy.
“The current state of the California economy and our forecast fall short of the weakness in previous historical episodes that we’ve chosen to label recessions,” Ratcliff and Nickelsburg write. “Based on comparing the current economy to past recession episodes, we once again conclude that real estate weakness will remain a significant drag on the economy, leaving us treading water in 2008 — but not slipping under the waves into recession.”
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