UCLA economists forecast negative growth for rest of year, turnaround in 2003
The nation is headed for a recession, but it won’t be particularly harsh in Southern California or on showbiz, UCLA economists speculate.
Additionally, Tuesday’s terrorist bombings may hold down fourth quarter results, but will only have a marginal effect over the nation’s long-term economic performance, according to the UCLA Anderson Forecast.
“The attacks are clearly a disaster for New York and the financial services industry, but once the shock wears off, the nation’s economy will remain intact,” economist Tom Lieser said. “We are clearly vulnerable to the forces of darkness but the world goes on.”
The UCLA Forecast, which was among the earliest to predict a recession, stood with the bears Wednesday by announcing that the last two quarters of this year will have negative growth of 1.1% in the third quarter and 1.0% in the fourth followed by a slight turnaround in the first quarter of next year and a full recovery by mid-2002.
But unemployment will rise to 6.3% a year from now from 4.9% in the current quarter.
The economists said California will see a mild and short recession during the rest of this year with a turnaround in early 2002, followed by strengthening in the second half.
“This is not a particularly bad downturn,” Lieser noted. He added that the entertainment industry, with a slight 0.5% job gain in 2001 following a 1.2% decline last year, should benefit from the recent resolution of labor conflicts and see more growth in 2002 and 2003.
The Forecast said the economy will soften in California due to the national and world economic slowdowns, but added that the impact of the state’s energy crisis has lessened.
Lieser also noted that the entertainment industry usually performs well during economic downturns. “Show business has a counter-cyclical strength,” he added.