State GDP growth to accelerate — Forecast projects job growth will soften, then recover

The California Lutheran University Center for Economic Research and Forecasting is releasing its 2016 First Quarter California and United States Forecast on Thursday, March 24.

Highlights:

We expect state GDP growth to accelerate a bit, to over 3 percent quarterly annual growth rates.

We expect California job growth to soften a bit and then slowly recover. San Francisco, San Jose, the Inland Empire and Fresno are likely to see significantly stronger growth than the state average. The state’s largest market, Los Angeles, will likely see significantly slower growth than California’s fastest-growing regions.

California’s population will continue to increase, in spite of modest out-migration.

  • Our U.S. forecast is for modest, but improving, economic growth. Our growth is unlikely to reach 3 percent on average.
  • S. job growth is likely to be weak. On average, we expect to see fewer than 200,000 net new jobs per month.
  • Both California and the U.S. are moving from tradable-goods-and-services jobs to non-tradable-service jobs, but California is moving much more quickly.  
  • S. real estate residential prices are up. Sales are up. New construction is up. We’re hearing stories about more aggressive lenders. The home ownership rate has recently shown the strongest uptick in years. It’s time to ask if we’re setting up another bubble situation. We don’t think so, at least not yet.
  • California’s home affordability has fallen dramatically over the past few years. In 2011-2012, about 55 percent of California’s households could afford the state’s median-priced home. Today, only about 30 percent could purchase the median-priced home. This is almost three times the number we saw in the real estate bubble’s peak-froth period, but that was an unsustainable bubble. Today, that 30 percent figure seems to be holding, with no upward or downward trend evident. 

California’s Economy Forecast: CA_Highlights1 CA_Forecast CA_Economy

Cal Lutheran CERF provides unflinching forecasts for government, business and nonprofit leaders. The center’s forecasters have been quoted by the Wall Street Journal, CNN and many other media outlets. For more information, go to clucerf.org.
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