Two million jobs could be lost nationwide next year under the weight of a severe global recession that shows no sign of relenting soon, UCLA forecasters say.
“We see this as longer-lasting than most recessions,” said Edward E. Leamer, director of the quarterly UCLA Anderson Forecast, which was released today. “The job market will remain weak.”
The nation’s unemployment rate will rise to 8.5% by late 2009 or early 2010, according to the forecast -- further straining a job market that matched a 34-year high last month by shedding 533,000 positions.
Undergirding the joblessness will be a continued decline in real estate values, diminishing wealth as a result of the stock market crash and weaker consumer spending.
The negative forces are predicted to help change the trend in the nation’s real gross domestic product from a growth of 1.3% this year to a 1.6% contraction next year. In 2010, the authors say, there might be a turnaround.
“Everybody is tightening their belts,” Leamer said. “Consumers have stopped spending almost on a dime.”
The forecast for California also appears grim. Manufacturing jobs are expected to disappear and tourism is likely to suffer from recessions overseas, the report said.
The state’s unemployment rate, which is currently at 8.2%, could rise to 8.7% and remain there until 2010.
“The stalled California economy is simply not producing jobs required for the new entrants to the labor force,” wrote Jerry Nickelsburg, senior economist for the forecast.
Retail, transportation, warehouse employment and temporary jobs are expected to suffer the most, while education and healthcare could hold steady.
Leamer said a multibillion-dollar stimulus package as proposed by President-elect Barack Obama would help the country in the long term. But he would prefer to see a more immediate infusion of cash into the economy, something like a debit card for shopping that could boost spending and consumer confidence.
“Uncle Sam should give $100 to every man, woman and child,” he said. “This is meant to be a mood elevator.”
Not everyone is sold on the grim forecast.
Lawrence E. Harris, a professor of finance at USC’s Marshall School of Business, thinks that 2009 will be tough but believes that a recovery will be spurred by Obama’s inauguration.
“I’m not so pessimistic,” said Harris, who was not involved in the UCLA forecast. “We’re in the midst of the most severe recession since the Great Depression, but it will all end as it always does. The government is giving out an awful amount of money. There’s also a lot of [private] money on the sidelines. When we see any potential for recovery, they will come back. Real money is made by those who don’t panic.”
The UCLA forecast comes two days after a similar report was released by Chapman University in Orange. A tongue-in-cheek rivalry has formed between the two schools.
James Doti, Chapman’s president, chided UCLA for failing to call a recession during its forecast in June. He also trumpeted his economists for being among the first to deem the nation’s economy in recession last year.
Leamer downplayed the issue in a phone interview Wednesday. “We don’t particularly notice them,” he said about Chapman.