The U.S. economy is expected to grow at an annual rate of 2 percent in 2012 and 2013, while in Southern California job growth will be more robust at a pace of 1.5 percent, according to an economic forecast.
The forecast by California State University Long Beach (CSULB) was released Thursday at the 18th annual regional conference.
Focusing on the five-county region that includes Los Angeles, Orange, Riverside, San Bernardino and Ventura counties, the 2012-13 Regional Economic Forecast estimated employment growth rates for the region as a whole and the national outlook.
The forecast said the region's economic recovery began in 2011; this was the first year since 2007 that the region had positive annual job growth. While this is good news for the region, the 0.6-percent growth last year was well below the historical average.
This year, job growth will be more robust at a pace of 1.5 percent.
"Some sectors of the economy are coming out of recession faster than others, and some areas of the region are leading the recovery while others lag a bit," said Lisa Grobar, professor of economics and director of the CSULB Economic Forecast.
While expecting the U.S. economy to grow at an annual rate of 2 percent both this year and next, the forecast said geopolitical concerns remain at the forefront. The tensions in the Middle East raise the prospect of oil supplies being disrupted. Additional increases in oil prices dampen consumer demand as well as affect business investment.
The dramatic increase in liquidity undertaken by the European Central Bank calmed the financial markets but did not solve the sovereign debt crisis, the forecast said.
Faced with these headwinds, consumer expenditures are expected to continue to grow at an annual rate of 2 percent over the forecast horizon. This modest growth is not enough to propel the economy forward at higher levels of growth, the forecast said.
Consumers are constrained by high debt loads, falling housing prices and lackluster growth in wages, according to the forecast.
However, the employment picture is brightening. Job gains are expected on the order of around 200,000 new jobs every month, and only modest reductions in the unemployment rate as the better employment numbers are likely to encourage workers to enter into the labor force, the forecast said.
The housing starts are slowly starting to show some signs of life, mostly due to new multifamily housing, according to the forecast.
Single family housing starts remain near historical lows. Given the level of pent-up demand due to delayed household formation, the housing market is poised to begin the long awaited recovery. Strong employment numbers will encourage the turnaround but not until 2013, according to the forecast.
On the regional forecast, this year, the region will post gains in most sectors, and a number of sectors will see job growth in excess of 2 percent. Among these is the retail trade sector, which will get a cyclical job boost this year as consumer spending continues to recover. The retail sector is expected to add jobs at a pace of 2.3 percent this year, the forecast said.
Another leading sector will be professional and business services, which will see growth of 2.9 percent this year. The leisure and hospitality services sector is also seeing a strong recovery and is expected to add jobs at a pace of 3.1 percent this year after a 2.1 percent gain in 2011, reflecting growing demand in the restaurant, hotel and amusement sectors, the forecast said.
After five years of negative job growth, employment in financial services will post a gain of 0.5 percent this year, according to the forecast.