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March 14, 2024 - By The UCLA Anderson Forecast ended 2023 ringing an “up” note as its December forecast asserted that the long, lingering possibility of a recession had faded because of expansionary fiscal policy, new national industrial policy and a national consumer base that continued to spend, despite the perception of economic uncertainty.
The first forecast of 2024 continues these themes, while also noting that the recurring threats of a government shutdown are short-lived and no longer sounding any serious alarms, and the strong second half of 2023 will carry into the new year.
While it’s true that January 2024 retail sales housing starts were down, the cause looks to be severe weather experienced in the eastern United States and not pullback by consumers or builders. Hiring remained strong in January and February, and though core inflation is coming down slowly, the forecast does not expect the Federal Reserve to decrease the fed funds rate until later in the year.
In California, the state’s GDP grew at a 3.8% compound annual rate from the first to the third quarter of 2023 (the latest data available), faster than the U.S. and all but three large states: Washington, Florida and Texas. Like California, Washington’s growth was driven by tech and aerospace, while part of the superior growth in Texas and Florida is attributed to in-migration, with more people moving to those states and working, rather than productivity and income gains. (In both of those states, construction of housing for new residents — and reconstruction of hurricane-devastated areas in Florida — contributed to their growth rates.)
With a loss in population in California, per capita income growth continues to rival similar large states across the country. While there are still challenges ahead — notably, state and local government finance, homelessness and out-migration — the forces driving California’s
Additional report: Hollywood restructuring and economic impact of strikes
Forecast director Jerry Nickelsburg provides an economic analysis of the writers and actors strikes that disrupted the entertainment industry in 2023. As Nickelsburg notes, the strikes led to near daily inquiries as to economic impact, and a fair amount of speculation from quarters.
The problem with any speculation or analysis, Nickelsburg notes, is that economic conditions are quite complicated. For example, 2022 was a recovery year from the dearth of production during the pandemic years of 2020 and 2021. Should the comparison be between 2023 when the strike was going on and 2022 when the industry was producing additional content post-pandemic? That would certainly inflate the economic impact. But what about factoring in a more normal year like 2019? From then until now, the entertainment industry has been adjusting to digital media, streaming and business models that were not generating the required returns to continue as before. This has resulted in a downward trend in the production of film and television.
Source: UCLA Andesron Forecast
