Again a 2-Scenario Forecast

The UCLA Anderson Forecast was released today. It again featured two scenarios, one with and one without a recession, with the difference largely a matter of what the Federal Reserve will do. Excerpt:

The California economy continues to roll toward a crossroads. One path leads toward a soft economic landing that sees the state’s economy continue to grow — and grow faster than the nation’s — and the other in which the state’s economy shrinks but by a lower percentage than the U.S. overall. A number of factors — including more construction, an ample rainy-day fund for state government, increased demand for defense goods, and increased demand for labor-saving equipment and software — could lead to the no-recession path. In that scenario, the unemployment rate averages for 2023, 2024 and 2025 are expected to be 4.1%, 4.0% and 4.0%, respectively, and non-farm payroll jobs are expected to grow at rates of 2.0%, 1.3% and 1.6% during the same three years.

Also under the no-recession scenario, real personal income is forecast to grow by 2.0% in 2023, by 2.8% in 2024 and by 2.6% in 2025. In spite of higher mortgage interest rates, the continued demand for limited housing stock, coupled with new laws throughout the state that permit accessory dwelling units to be built in single-family-zoned neighborhoods, would lead to a forecast of increased homebuilding through 2025. The Forecast economists expect the number of permits to grow to 159,600 in 2025.

In the recession scenario, the California economy would decline, but by less than the U.S. economy. Unemployment rates for 2023, 2024 and 2025 would be expected to be 4.4%, 4.8% and 4.6%, respectively, and growth in non-farm payroll jobs is expected be 1.4%, 0.2% and 1.6% during the same three years. Real personal income is forecast to grow by 1.5% in 2023, by 1.8% in 2024 and by 0.6% in 2025. The economists would expect 91,000 net new housing units to be permitted in 2023 and the number of permits to grow to 154,000 in 2025...

Full release at https://www.anderson.ucla.edu/news-and-events/press-releases/resilient-us-economy-continues-avoid-recession-so-far.

UPDATE: The Forecast can be seen at:

Or direct to https://www.youtube.com/watch?v=YIhL4cMwuR0.