Yesterday's UCLA Forecast

From a news release: ...The shadow of uncertainty is cast over the California economy, and the winter 2024 UCLA Anderson Forecast for California reflects the unknowns. As in the national forecast, tariffs, immigration policy, regulatory policy and tax policy figure heavily in the California forecast. Immigration policy will likely have two effects on California. The first is a withdrawal of millions of undocumented workers from the U.S. labor force, either through the deportation process or because they have voluntarily stopped working in the face of high risk of deportation. The second concerns H1B visas to work in the tech industry. The emphasis the new administration is expected to place on growth in technology suggests that H1B visas will benefit California’s tech industry.

With respect to taxes and regulation, the Forecast assumes that, to the extent that they happen, they will have only minor impact and will take time to be felt. In the U.S. forecast, the 2017 Tax Cuts and Jobs Act cuts that expire in 2025 are expected to be renewed, as are some smaller tax cuts through the next two years. Assumptions about Trump administration policies is based on the Forecast economists’ guesses and not on any data other than pronouncements Trump made during the presidential campaign, and his recent appointments of key personnel for the incoming administration. It is important to keep in mind that political exigencies can radically alter promised policy.

With these assumptions in place, the California forecast expects the state’s economy to grow at about the same rate as the country’s in 2025 and 2026.

The unemployment rate for the fourth quarter of 2024 is expected to average 5.3%, while the averages for 2025 and 2026 are expected to be 5.5% and 5.0%, respectively. The UCLA Anderson forecast expects the 2025 and 2026 total employment growth rates to be -0.7% and 1.6%. At the same time, non-farm payroll jobs are expected to grow at rates of 1.5% and 1.3% during the same two years. Real personal income is forecast to grow by 2.3% in 2025 and 2.6% in 2026.

Despite higher interest rates, the continued demand for a limited housing stock, coupled with state policies inducing new home building, should result in the beginning of a recovery this year in the housing sector, followed by slow but solid growth in new home production thereafter. The forecast anticipates new units to grow to 143,000 by the end of 2026. Based on this level of home building, the private sector’s prospect of building out of the housing affordability problem over the next three years is nil...

Full release at https://www.anderson.ucla.edu/news-and-events/press-releases/incoming-administrations-policies-signal-new-economic-uncertaintie.

UPDATE: The video of the Forecast program is at:

Or direct to https://www.youtube.com/watch?v=rbpRv5pt5OE.