The latest UCLA Anderson School of Management economic forecast expects robust demand for leisure and recreation activities as people crave a return to normalcy.
Leo Feler, a UCLA Anderson senior economist, told “Inside the Issues” host Alex Cohen that the June forecast predicts 2021 will continue to be a strange year for economic data as the U.S. enters a post-pandemic period, but California is expected to bounce back quickly.
“We have over 9 million job openings, a record high. Even though we still have more than 7.5 million people who lost jobs prior to the pandemic,” he said. “We have a lot of mismatch, higher inflation, a lot of unemployment, but a lot of job openings,” he said.
Feler notes inflation rates are currently above 4%, the highest the country has seen in the last decade, with rental cars and lumber reaching exorbitant prices. However, UCLA forecasts the economy will return to its normal rhythms by the end of 2021, with an average growth rate of 7.1%.
“This is one of the highest growth rates that we've had over the past 70 years,” Feler explained. “It's not surprising that when we are growing this fast after such a deep recession, that there's going to be some supply chain bottlenecks and demand is going to move faster than supply for a period of time.”
The report also reveals California’s COVID-19 safety practices protected the economy. Feler said states did not actually have to choose between saving lives or saving the economy, they could do both at once. The forecast shows California was able to maintain a lower death and infection rate, all while achieving a better economic outcome, especially when compared to states like Florida and Texas with looser safety restrictions.
Feler notes the Golden State’s success is partly due to its dynamic economy.
“We have a very diverse economy right we're not just concentrated in leisure and hospitality and tourism, we have tech, we have manufacturing, we have farming. And so our economy is more resilient, and it was able to withstand the COVID shock in a much better way,” he added.
Even though the state is still struggling with high unemployment, Feler explains Californians have an entrepreneurial streak with more gig work and side hustles. He expects the state to close these unemployment gaps in the near future and do so at a much quicker pace than many other states.
However, he adds the state’s job market will continue to be impacted by COVID-19.
“People have changed their preferences. They want jobs where they can perhaps work a little bit more from home,” he said. “They want more flexibility, but also especially at a time when we still only have about 50% of the population vaccinated, people don't want to take frontline jobs where they have high exposure.”
Feler says due to these concerns labor shortages will continue in the hospitality and leisure industries some time. Likewise, 40% of children are not back in school full time, leaving many mothers unable to fully return to previous jobs or acquire new ones.
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