State Outpaces U.S. in Employment Growth : Outlook: UCLA Business Forecast says that contrary to popular perception, California’s economy continues to recover.

California is generating jobs faster than the nation as a whole for the first time since 1980, and annual state job growth should exceed 2% over the next 20 years, according to UCLA’s quarterly business forecast to be released today.

The widely watched UCLA Business Forecast says California’s economy is continuing to recover even though the national economy is slowing down--a positive trend that runs counter to popular perceptions that the state’s economy remains troubled.

California’s non-farm employment will grow by 2.3% in 1995, 2.2% in 1996 and 2.3% in 1997, the report predicts. While the state’s unemployment rate will also exceed the nation’s in the near future, it will nevertheless drop to 7.9% in 1995 from 8.6% last year, remain at 7.9% in 1996 and drop to 7.7% in 1997, UCLA forecasters said.

The latest predictions by the Business Forecasting Project are slightly more optimistic than those issued in June, which were more downbeat than previous ones.

On Monday, a Los Angeles Times Poll found that more Californians fear the state’s economy will worsen in the next three months than at any time since 1993, near the depths of the recent recession.

UCLA’s latest revision comes because the fallout to the state’s economy from a national slowdown over the summer was less dire than feared, said Tom K. Lieser, associate director of the forecasting project and author of the state forecast.

“We were concerned that California might be impacted by the national slowdown, but it seems we’re doing a little better at this point than the nation, and that will give us about a 2% growth rate for the third quarter,” Lieser said.

Lieser said he is still concerned about the slackness in the state’s real estate market, where prices have been falling for several years. Prices should begin to rise in 1996, though annual inflation-adjusted gains should average less than 1% over the next 20 years, UCLA said.

But other state trends bode well for the immediate future, Lieser said. Consumer spending is good and business lending is picking up.

For the long term, UCLA was rosy in its outlook, though forecasters said there will be no return to the 3%-plus annual growth rates of the immediate post-World War II era.

“Annual employment growth will average about 2% over the next 20 years, well above the national average,” the forecast says.

Driving the growth will be the continuing surge in service industries, a tapering off of defense layoffs and a return, after the turn of the century, to residential construction of about a quarter of a million units a year.

In addition, net migration of population to the state, which bottomed out in 1994 at near zero, will begin to pick up again, with the state’s population growing by about 1.35% a year from 1995 to 2015. That would still be the lowest growth rate in California history.

Other predictions:

* Real personal income will grow 4% in 1995, 2.4% in 1996 and 3.6% in 1997.

* New residential construction should begin to recover next year. New building permits will total 93,000 in 1995, 125,000 in 1996 and 141,000 in 1997.

* Net immigration will approach 100,000 by 1997.

* ECONOMIC SETBACK

L.A. County cuts will hurt but won’t stop recovery. A14