UCLA economists: no 'double dip'

Rejecting the possibility of a "double dip" recession, economists with the University of California, Los Angeles, Anderson Forecast say they expect economic growth to remain on track even in the face of continued high unemployment.

"Simply put, the financial emergency of 2007-09 is over, and we believe the Fed will soon recognize this reality" by tightening monetary policy, UCLA Anderson Forecast Senior Economist David Shulman said.

In their first quarterly report of the year, economists with the forecast predict the nation's economy will grow at an annual rate of 3.2 percent during the first three months of the year before leveling off to 2 percent for the remainder of 2010.

Economic growth -- as measured by gross domestic product (GDP) -- is expected to average 2.3 percent in 2011 and 3.2 percent in 2012, propelled by strength in business equipment and software production, exports, and a revival in home construction from postwar lows.

But job growth is expected to remain anemic through 2012, with unemployment averaging 9.7 percent this year and not dipping below 9 percent until 2012, when it's expected to average 8.6 percent.

The forecast predicts that California's unemployment rate, currently 12.5 percent, will ease a bit and average 11.8 percent for the year.

California’s economic prospects depend on demand for manufactured and agricultural goods from outside the state, public works construction, and investment in business equipment and software.

Although the state's economy is expected to grow, it won't generate enough jobs to bring unemployment back into single-digits until 2012, the forecast predicted.

Some pundits have the called the current trend of economic growth coupled with high unemployment a "jobless recovery." Shulman has coined his own term: "The Bipolar Economy."

Government stimulus programs -- including tax cuts, spending programs, and near-zero short-term interest rates -- have spurred growth, he said.

But unemployment may be so persistent because companies aren't going to base long-term hiring decisions on "temporary tax and spending programs coupled with a nonsustainable zero interest rate policy," Shulman said. ...CONTINUED

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