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UCLA Anderson Forecast Predicts “Weakness” In The National Economy Due To Problems In The Housing Market
California Economy To Experience Similar Conditions as State’s Real Estate Market Cools; No Recession Forecasted for the U.S. or California
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December 7, 2005
UCLA Anderson Forecast
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LOS ANGELES — In it’s 54th annual report, the UCLA Anderson Forecast sees problematic
conditions in the National economy through 2007, but not enough to be called a recession.
Manifest problems in the housing sector will result in sluggish economic conditions, but
with few jobs to lose in an already moribund manufacturing sector, no true recession is
foreseen. The California Forecast mirrors that of the Nation. The housing market will
cool off, consumer spending will slow and there may be some job loss in construction and
other real estate related industries. California “probably will not see a full-blown
recession.”
The National Forecast
In the latest Forecast report, UCLA Anderson Forecast Director Edward Leamer writes,
“Housing is in a perilous position,” but that, “housing alone cannot constitute a recession.”
The report titled, “No Recession Any Time Soon, But Troubles Ahead, Nonetheless,” details
the relationship between the housing sector and the employment sector. Dr. Leamer asserts,
“A recession is first and foremost a period of job loss and elevated unemployment.” While a
hit to the housing market may cause a loss of some jobs in construction and related industries,
the manufacturing sector is virtually at the floor and there is hardly any room to fall further.
In short, with no excess employment in manufacturing, there are no jobs to lose. Thus, a
slowdown in housing will produce a slowed economy, but without the job losses in the
manufacturing sector, it won’t be a recessed economy.
The California Forecast
The California Forecast, authored by Senior Economist Ryan Ratcliff, also warns of problems
in the housing market, with some job loss in related sectors. The Forecast calls for a plateau
in home prices, a moderate decrease in sales and new building and two years of weak growth.
The report also calls for a slowdown in construction activity through 2007. Ratciff states
that, “Overall, this leads to two years of anemic growth in all of the major indicators – but
no recession.”
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About UCLA Anderson Forecast
The UCLA Anderson Forecast, one of the most widely watched and often-cited economic
outlooks for California and the nation, is no stranger to accurate forecasts.
The forecasting team is credited as the first major U.S. economic forecasting group
to declare the recession of 2001. The team was also unique in predicting both the
seriousness of the early-1990s downturn in California, and the strength of the state’s
rebound since 1993.
Founded in 1952, the UCLA Anderson Forecast is one of the most widely watched and
often-cited economic outlooks for California and the nation. Award-winning for its
accuracy, the UCLA Anderson Forecast often breaks with consensus in its quarterly
forecast reports, which feature projections for major economic indicators, including
inflation, interest rates, job growth and gross domestic product growth.
About UCLA Anderson School of Management
UCLA Anderson School of Management is perennially ranked among the top-tier business
schools in the world. Award-winning faculty renowned for their research and teaching,
highly selective admissions, successful alumni and world-class facilities combine to
provide an extraordinary learning environment. UCLA Anderson students are part of a
culture that values individual vision, intellectual discipline and a sense of teamwork
and collegiality.
Established in 1935, UCLA Anderson School of Management provides management education
to more than 1,400 students enrolled in MBA and doctoral programs, and some 2,000
executives and managers enrolled annually in executive education programs. Recognizing
that the school offers unparalleled expertise in management education, the world's
business community turns to UCLA Anderson School of Management as a center of influence
for the ideas, innovations, strategies and talent that will shape the future.
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