California’s growth will slow this year as unemployment rises and job creation weakens in the wake of the coronavirus outbreak, according to a UCLA forecast.
The nation’s largest port is hurting. That may be a leading indicator of the pain that’s in store for Southern California and the U.S. economy as businesses hunker down to deal with the rapidly expanding new coronavirus.The state’s jobless rate will average 4.4% this year, growing to 4.5% in 2021 and dropping to 4.3% in 2022.
Last month, UCLA economists were in the middle of compiling data for their quarterly March report when the coronavirus hit the U.S. “As a result we tore up the forecast we were about to present,” wrote senior economist David Shulman, adding that the new forecast is “an attempt to distill incomplete and rapidly evolving information.”
In California, he said, “You’re going to see a significant drop in consumer demand — something you only see in recessions. We’re seeing cancellations of events. Employers have people working from home. That will impact bars and restaurants. With the drop in air travel, hotel occupancies are down.“You’ll see pretty big declines in sales at retailers, maybe not in March because there’s a hoarding effect with people buying toilet paper at Costco.
Allan Zaremberg, president of the California Chamber of Commerce, said that when he went to get his car serviced at a BMW outlet in Sacramento this week, the mechanic complained that business had slowed since the coronavirus hit.“People are probably more conservative in spending money,” Zaremberg said. “That may impact the macro economy in the long run.”
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