UCLA forecast: Still sluggish

Growth over the next three years will be slower than the nation as a whole, according to the Anderson Forecast economists, with state unemployment expected to remain in double-digits until 2012 (it was 12.6 percent in April). Inland areas that were hit hard during the real estate meltdown will have an especially tough time. There are a few bright spots, among them health care, exports, and tech-related manufacturing. From economist Jerry Nickelsburg:

We are now in that strange period when the California economy is growing but job growth is extremely slow. At this point, the California economy is sitting just above the trough and well below its previous peak. And there is a long climb ahead. Not only does the state economy have to generate 1.3M jobs to get back to where it was prior to the recession, but it must generate additional jobs for all of the new entrants to the labor force over the past two and a half years.

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Typically, structural adjustment such as occurred in aerospace in 1991 and in the internet and software sectors in 2001, requires four to six years for recovery. With residential construction in the Inland Empire and Central Valley beginning its adjustment in 2006, we can expect no substantial growth in this sector over the forecast horizon. If other sectors do not pick up the slack, the bifurcated recovery will be with us for the next few years.

One piece of good news: L.A. appears to be in somewhat better shape than the state economy as a whole. That's because of the area's manufacturing sector and renewed activity at the ports.