You may be shut inside your home. You may be out working a job but in fear of contracting the coronavirus. You may be mourning the demise of your neighborhood’s small businesses. You may be unemployed and unable to pay your rent.
And for the next few months, the situation may grow even worse.
But then get ready for the roaring ’20s.
UCLA economists issued an optimistic forecast Wednesday, predicting the U.S. economy will experience “a gloomy COVID winter and an exuberant vaccine spring,” followed by robust growth for some years.
“The ’20s will be roaring, but with several months of hardship first,” according to the quarterly UCLA Anderson forecast. “These next few months will be dire, with rising COVID infections, continued social distancing, and the expiration of social assistance programs.”
The forecast, which assumes mass vaccination of Americans will take place by summer, predicts that annualized growth in the nation’s gross domestic product will accelerate from a weak 1.2% in the current quarter to 1.8% in the first quarter of next year, then to a booming 6% in next year’s second quarter and consistent 3% growth each quarter thereafter into 2023.
“With a vaccine and the release of pent-up demand, the next few years will be roaring as the economy accelerates and returns to previous growth trends,” wrote Leo Feler, a senior economist with the forecast. “We expect a surge in services consumption and continued strength in housing markets to propel the economy forward.”
California’s recovery will ultimately look similar to the U.S. trajectory, the forecast predicts. In October, the state’s unemployment rate was 9.3%, considerably higher than the national rate of 6.9%, and probably influenced by a loss of international tourism and tighter restrictions on businesses than in many other parts of the country.
But “the state is due to grow faster than the U.S. once restrictions are lifted and the pandemic is in the rearview mirror,” wrote economists Jerry Nickelsburg and Leila Bengali, authors of the California section of the report.
California joblessness will drop from 8.9% in the last quarter of this year to 6.9% in 2021, 5.2% in 2022 and 4.4% in 2023, according to the forecast. That’s still higher than the pre-pandemic rate of 3.9% in February.
Nonfarm payrolls will drop 6.8% this year and then — boosted by technology, residential construction and logistics jobs — will grow 3.6% next year, 3.8% in 2022 and 2.5% in 2023, the forecast predicts.
But the tourist-dependent leisure and hospitality sector, which bore the brunt of California’s 1.37-million-job loss over the last year, could remain 20% below its January 2020 peak even by the end of 2023, according to the forecast, as travelers remain concerned about safety and consumers feel pinched by the income lost during the pandemic.
“That translates to…
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