State’s Job Growth Could Outpace Nation : Economy: Study predicts that California’s long-term potential will not be affected by the recession.

Arguing that there will be limited effects from the recession from which California is just now emerging, a study released Monday projects that the state could add 310,000 jobs a year by 2005--a rate of growth that would outpace the nation.

Such job growth--accompanied by increases in personal income, number of households and total population--will occur if the state government takes steps now to improve California’s education system, infrastructure, quality of life, high cost of doing business and regulatory environment, according to the study by the Center for Continuing Study of the California Economy, a Palo Alto-based think tank.

Though such steps are hardly assured, the study’s projections look farther into the future and are much more optimistic than other recent projections. In March, for example, the widely watched UCLA Business Forecasting Project predicted only modest employment growth (3.5%) and income growth (15.4%) in the state between 1993 and 1996.

“We think that the evidence shows that the longer-term growth potential in the state was not diminished by the fact that we’ve gone through this very long and deep recession,” said Stephen Levy, an economist and director of the California center.

California’s recession resulted from a downturn in home construction, cutbacks in defense contracts, a falloff in orders for commercial aircraft and a surprisingly strong decline in personal spending, the study found.

But those factors are cyclical and have little to do with the state’s long-term potential for growth because of its inherent strength in several key sectors: foreign trade, high-technology, tourism, entertainment and professional services, the report says.

Among the study’s projections:

* Jobs will grow to 17.4 million in 2005 from 13.7 million in 1993, a 27.2% increase. That compares to a projected 17.5% increase for the nation as a whole in the same period.

* Income will increase to $1 trillion from $681.1 million, a 47.7% rise, compared to 33.5% for the nation.

* The state’s population will balloon to 38.5 million from 31.7 million, a 21.3% increase, compared to 11.5% for the nation.

* The number of households will climb to 13.3 million from 10.8 million, a 23% increase. For the nation, the increase will be 11.8%.