The recently published Business Forecasting Center’s 3rd Quarter of 2007 California Metro Forecast revisits its take on what will happen to the California economy in the following years. The more recent forecast predicts that the impact of the falling housing market on the state’s economy is larger and will last longer than predicted by our 2nd quarter forecast. For that reason, the impact will prolong the slowing in job growth, thus delaying the rebound. Most other sectors will still continue to add jobs, however. Similar to the previous forecast, the current forecast does not call for a recession (in the state or in any of the 11 focused metro areas) in the near future.
The figure shows how two different forecasts describe differently the trend of job growth in the state from the 3rd quarter of 2007 to the last quarter of 2009. Both forecasts call for a steep slowing of job growth in California in the last quarter of 2007. Our 2nd quarter forecast predicted that job growth would slow even further in the first quarter of 2008, but is expected to ease up in the second quarter of 2008. Job growth is expected to continue to accelerate after that. In sum, this previous forecast indicated that after fading badly, job growth would rebound and start picking up the pace in the 2nd quarter of 2008.
The more recent 3rd quarter forecast also expects that job growth will slow further in the first quarter of 2008. However, while the slowing is not as bad as that called by the previous forecast, it is easing up at a slower pace. As a result, the California economy will see the slow job growth lasting longer until the last quarter of 2008. Job growth is expected to rebound not until the first quarter of 2009. Job growth will gradually increase after that and beginning in the 3rd quarter of 2009, will outpace the 3rd quarter of 2007 job growth.
Holding the state’s economy during those periods is strong job growth in the following sectors: Professional and Business Services; Trade, Transportation and Utilities; Leisure and Hospitality Services; Education and Health Services; and State and Local Government.
