State figures to top national figures
Mediha Fejzagic DiMartino, Staff Writer
Created: 03/09/2011 08:16:43 PM PST

California isn’t expected to shake off its double-digit unemployment rate until 2013, economists say.

The UCLA Anderson Forecast’s first quarterly report of 2011 suggests the state’s unemployment numbers, although improving, will continue to exceed national figures for the next couple of years.

“We don’t expect it to reach 9.7 percent until the first quarter of 2013 and we expect (it) to remain elevated at 8.9 percent,” said Jerry Nickelsburg, UCLA’s senior economist.

The state’s economic forecast predicts the unemployment rate will remain at 10.5 percent next year as it struggles to create 1.3 million jobs lost during the recession as well as find employment for new entrants into the workforce.

The drivers of the recovery in the Golden State will be education, healthcare, exports and technology mainly in coastal areas and, to some extent, growth in residential construction inland.

“The economic growth will be bifurcated with early recovery along the coast coexisting with continued economic doldrums to the east,” Nickelsburg said.

The forecast for the Inland Empire calls for more of the same.

“Typically, large structural adjustment, which occurred in the Internet and software sectors in 2001, requires four to six years for recovery,” Nickelsburg said. “With residential construction in Inland Empire and Central Valley beginning its adjustment in 2006, we can expect no substantial growth in these regions over the forecast horizon . If other sectors do not pick up the slack, the bifurcated recovery will be with us for the next few years.”

Employment growth is expected to speed up in 2012 and 2013 as the recovery takes hold – reaching 3.7 percent in 2013.

Construction industry is likely to see a 14.2 percent increase in 2013, up from negative 11.8 percent in 2010.

Residential building permits will likely double to 115,400 in 2012, reaching 168,800 in 2013.

But relying on the construction industry to help pull the Inland Empire into recovery is not a wise bet, said Brad Kemp, a director of regional research at Los Angeles-based Beacon Economics.

“We cannot depend on construction,” Kemp said. “That’s crazy. The same mentality that’s gotten us in trouble in the first place.”

Instead, the region’s focus should be in manufacturing and research, “a shift from a low-tech manufacturing base to knowledge-based one.”

“For that to happen, you need a shift in education base and that is not happening, you’re not getting qualified applicants,” Kemp said.

Local governments have been supporting the region’s expansion as a residential community, bringing in more retail and expanding freeways for workers to travel to other regions, Kemp said.

“That brings us back to status quo,” he said. “I’d rather see jobs created in those markets.

“Sketchers just opened a manufacturing site in Riverside. We have to create opportunities to bring those businesses inland, to tell them you have workforce living here that is working for you in your Orange County site, and they’ll be happier working here. Bring engineering firms and retailers will be at your doors too.”

On the bright side, the national gross domestic product continues to grow at a steady pace – the report predicts an increase of 3.8 percent in the current quarter, with a continued 3 percent growth through 2013.

Factors positively affecting the national economy includes strong corporate spending on equipment and software, low interest rates, recovering stock market as well as investment incentives coming out of Washington, D.C.

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