A slowing real estate market in California will hurt the state’s economy, according to the University of California, Los Angeles, economic forecast.

The UCLA Anderson Forecast, which also reports on national and local expectations, projects that 200,000 jobs will likely be lost in California’s construction sector “as residential construction and remodeling slow markedly,” according to an announcement today.

Christopher Thornberg, senior economist for the forecast and author of the California forecast, said, “The only debate now is how hard a landing there will be and what will it mean for the general economy.” In his report, Thornberg calls for a rise in the state’s unemployment rate, from 5.6 percent in fourth-quarter 2006 to 6.3 percent in fourth-quarter 2007.

“On the positive side, the report says that jobs in professional services are growing and even though the manufacturing sector is not adding many jobs, output continues to rise. While the cooling housing market certainly has a significant downside, it is actually beneficial for export-oriented California,” according to the announcement.

Nationally, “a meaningful slowdown for the U.S. economy is in the offing for late 2006 and early 2007,” according to the forecast. But the forecast does not predict a recession.

David Shulman, a senior economist for the forecast, expects real gross domestic product growth of 3.2 percent, 2.4 percent, and 3.2 percent in 2006, 2007 and 2008, respectively. There is a risk, he stated, “that the slowdown we envision turns into something worse.”

Titled “Too Complacent,” this national forecast states that higher short-term and long-term interest rates, an approximately flat yield curve, weakness in the housing sector and higher energy prices contribute to an overall weakness in the economy. Shulman concludes that part of this weakness will be offset by strong capital spending and a leveling off in the decline of net exports.


Send tips or a Letter to the Editor to glenn@inman.com or call (510) 658-9252, ext. 137.

Show Comments Hide Comments


Sign up for Inman’s Morning Headlines
What you need to know to start your day with all the latest industry developments
By submitting your email address, you agree to receive marketing emails from Inman.
Thank you for subscribing to Morning Headlines.
Back to top
Inman Connect Las Vegas Memorial Day sale – 44% off exclusively for Select subscribers!Register Now To Save×
Limited Time Offer: Get 1 year of Inman Select for $199SUBSCRIBE×
Log in
If you created your account with Google or Facebook
Don't have an account?
Forgot your password?
No Problem

Simply enter the email address you used to create your account and click "Reset Password". You will receive additional instructions via email.

Forgot your username? If so please contact customer support at (510) 658-9252

Password Reset Confirmation

Password Reset Instructions have been sent to

Subscribe to The Weekender
Get the week's leading headlines delivered straight to your inbox.
Top headlines from around the real estate industry. Breaking news as it happens.
15 stories covering tech, special reports, video and opinion.
Unique features from hacker profiles to portal watch and video interviews.
Unique features from hacker profiles to portal watch and video interviews.
It looks like you’re already a Select Member!
To subscribe to exclusive newsletters, visit your email preferences in the account settings.
Up-to-the-minute news and interviews in your inbox, ticket discounts for Inman events and more
1-Step CheckoutPay with a credit card
By continuing, you agree to Inman’s Terms of Use and Privacy Policy.

You will be charged . Your subscription will automatically renew for on . For more details on our payment terms and how to cancel, click here.

Interested in a group subscription?
Finish setting up your subscription