Report Suggests No Double-Dip Recession in 2012

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NEW YORK (MainStreet) -- Analysts at UCLA say the U.S. economy remains mired in a “slump,” but do not foresee a double-dip recession through 2013.

The research comes from the UCLA Anderson Forecast – a quarterly look at the U.S economy from the UCLA Anderson School of Management that until recently has been decidedly bleak in its outlook.

Consider the Anderson Forecast’s third quarter report, released on Sept. 20, which said the “outlook for the nation is ‘far worse’ than it was just three months ago. Considering the weak, revised data for the first half of the year, the forecast calls for average gross domestic product growth of just 0.9% on average for the next five quarters and ending in the first quarter of 2012.”

But that was then and this is now, and the fourth quarter forecast, while not exactly in the “roses and unicorns” category, seems much better than what UCLA told us in Q3.

In the fourth quarter report, Anderson analysts do see a continued trough for the U.S. economy, with gross domestic product (the chief barometer of domestic economic activity) growing at a “below trend rate” over the next five quarters.

Statistically, the Anderson data is calling for just 2% growth in the last quarter of 2011, and sub-2% growth rate for most of 2012. The news does grow better the further down the line that UCLA economists look, though, with a 3% gross domestic product growth rate pegged for 2013. But as economic analyses go, the farther out you look, the more likely changes will be made in those forecasts as economic events change – and 2013 is still a long ways away.

But for the short term, the Anderson forecast is a slightly bullish one. According to the Q4 forecast, “Despite the tepid numbers, the current national forecast is actually more optimistic in tone than the preceding forecasts of June and September. In California, the current forecast is for the recent surge in employment to abate while slow growth persists on average through 2012. The rest of the United States, the state’s international trading partners and consumer purchases will combine to generate faster growth in 2013.”

Buried down in the Anderson numbers is a reference to an essay penned by UCLA Anderson Forecast senior economist David Shulman, author of the report, called “The Long Slump.” There, the dour economic numbers are closely linked to a weak unemployment number.

While the current unemployment rate is 8.6%, Shulman estimates the rate will rise back up to more than 9% in 2012, and that will extend what the author calls the worst jobs environment in 70 years.

“Put simply,” Shulman writes, “there are currently 25 million Americans looking for full-time work.” And while the forecast calls for job growth of 150,000 per month, total payroll employment will still be 3 million jobs below the 2007 peak and real personal income is still below the level reached in 2008.

"A modestly growing GDP on the order of 2% will not be sufficient to lower the unemployment rate much below 9% through 2013,” Shulman adds in the report. “Furthermore, government policy seems to be incapable of noticeably improving the situation. Indeed, the federal government will be reducing purchases during the forecast period. The economy will be sustained by modest increases in consumption and business investment along with the beginnings of a housing recovery in 2013.”

The Anderson report does note that California is experiencing some positive growth signs that could spread to the rest of the country, especially in terms of jobs and housing. But even that recovery won’t be “robust,” UCLA analysts say.

But after five years of limp economic progress, Americans in and out of California may not have a choice. In this economy, people will take whatever good news they can get.

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