California economy weak, but no recession, according to Anderson report

Mortgage defaults and a “sustained lull” in home building will weigh on California’s economy for at least another year but will not tip the state into a recession, according to UCLA Anderson Forecast. “Overall, our forecast is that California is in for at least another year of these economic doldrums, with rising unemployment, weak job growth and a slowdown in all broad indicators,” the report said and “Barring a substantial worsening in housing or another source of weakness suddenly appearing, California’s sluggish economy will not spiral into a full-blown recession”. Economist Ryan Ratcliff of the forecasting unit wrote in the report that rising mortgage defaults in California have begun to slow payroll job growth and lift the state’s unemployment rate. Mortgage-related job losses have “swamped” financial service payrolls while construction payrolls are being trimmed, Ratcliff wrote. However, other sectors are adding employees so California will maintain very weak payroll growth through late 2008.