Anderson Forecast sunny

Valley Press on ^ | Thursday, December 6, 2007. | JIM SKEEN

[BenLurkin]

The nation and the state will experience an economic malaise into 2008, but a recession is not in the cards, according to a report by UCLA Anderson Forecast. Housing will continue to drag on the economy in the first half of 2008, but should begin a slow recovery thereafter. While housing declines in the past have been good indicators of recessions, the latest decline is not coupled with the job loss that plunges an economy into recession.

"There's going to be an extended period of economic sluggishness," said Edward Leamer, director of the UCLA Anderson Forecast. "It's going to be like a gray day. It's slowly going to disapate."

To slide into a recession, the national unemployment rate would have to climb from 4.6% to nearly 6% by the end of 2008. The report's economists say they don't see a job sector that would cause that level of joblessness.

In the last recession of 2001, the nation lost 3 million manufacturing jobs. Unlike the aftermath of previous downturns in manufacturing, those jobs never came back, the economists said.

Overall, job growth is just 6% over the recession trough of 2001.

"How can we lose jobs we never found?" the report said.

In the past, housing declines have been coupled with job loss. The latest decline, however, was created by the subprime loan mess, not from people losing their jobs.

"We are looking for a couple more quarters in which housing and other problems drag growth lower than normal, and in the fourth quarter of 2008, it's back to normal growth," the report said.

Areas such as the Inland Empire and the Antelope Valley will begin to recover, Leamer said.

"Builders will quickly adapt with lower prices and get appreciation going again," Leamer said. "By '09, we'll get back to normal."