Report: US hasn't seen expected 'Great Recovery'AP , Associated Press
Jun. 5, 2013 2:45 PM ET
LOS ANGELES (AP) — The expected U.S. "Great Recovery" hasn't materialized and the economy has fallen short of even normal growth, according to a forecast released Wednesday.
The second-quarter UCLA Anderson Forecast said the growth of real gross domestic product — meaning the inflation-adjusted value of goods and services produced — is too small to help the nation climb out of its slump.
The figure was 15.4 percent below a "normal" growth trend, forecast director Edward Leamer wrote.
"To get back to that 3 percent trend, we would need 4 percent growth for 15 years, or 5 percent growth for eight years, or 6 percent growth for five years, not the disappointing twos and threes we have been racking up recently," he said.
"It's not a recovery. It's not even normal growth. It's bad," he wrote.
A real GDP growth rate of just 1.9 percent is expected for this year, only rising to 3 percent in 2015, according to the forecast.
The figures will get a boost from a recovering housing market, forecasters said, with housing starts jumping from the historic low of 550,000 in 2009 to 1.5 million by 2015.
Unemployment should fall to 6.9 percent next year and 6.6 percent by 2015, according to the forecast — partly due, however, to discouraged workers dropping out of the labor force.
Leamer said that while jobs are being created, "the tepid growth continues to obscure the nation's most fundamental problems: too much government spending funded with too much borrowing, too little national savings to cover late-in-life health care issues and too many workers lacking the skills to compete in the modern economy," according to a University of California, Los Angeles press statement.
In addition, the jobs being created may not provide workers with a secure future and the education system is failing to provide skills such as analytical thinking that will be crucial for future workers, he wrote.
"Regrettably we reward teachers if their students can regurgitate the information on standardized tests," Leamer wrote.
California, meanwhile, outperformed the nation in job growth during a 12-month period that ended in April. Only Utah's growth rate was greater, the forecast said.
The forecast for all of 2013 is for total state employment growth of 2.6 percent, slightly higher than predictions for national growth.
However, the state's current unemployment rate of 9 percent is still higher than the overall U.S. rate of 7.5 percent. UCLA forecasters predicted the state figure will drop to 8.8 percent by the end of the year and 7.7 percent by the end of 2014.
The state's technology sector was a big contributor to job increases, along with the construction industry, which benefited from rising demand for housing, the UCLA forecast said.