That's the main message in the latest report from the UCLA Anderson Forecast. Looking at California, economist Jerry Nickelsburg points to an improving housing picture, as well as a pickup in manufacturing activity (good for exports out of the state). But the big downside is employment, with the outlook for continued double-digit unemployment going out at least the next year or so.

The numbers are ugly to say the least and will remain so for some time. More rapid growth than can be expected over the next twelve months would be required to bring the unemployment rate down. The overall outlook is not much changed from our June forecast. We are expecting little growth through the middle of 2010 and a take-off towards the latter part of next year.

One complication that Nickelsburg has been stressing is the deteriorating outlook in Sacramento. Making up 16 percent of all California payroll jobs, state and local governments "will damper the impact of the forces of recovery for the balance of the fiscal year." Then, of course, there's consumer spending - or should we say the lack of it. As posted yesterday, August port traffic remains pretty awful compared with a year earlier, which means that retailers anticipate a modest holiday shopping season, at best.

Consumers are still not spending much at malls across the U.S., and therefore manufactured goods from industrial Asia are not yet on their way to California's ports. The rundown of inventories in the "Cash For Clunkers" spending spree, ought to lead to new orders for imported goods, but as yet there is no evidence of such a change. Until goods begin to flow again, California's warehousing and transportation sectors will continue to have a large amount of idle capacity.