Uncertainties surrounding the coronavirus and the omicron have prompted UCLA Anderson Forecast to cut their forecasts for California employment growth and total jobs in 2022, economists said Wednesday.
All of this means there will be fewer jobs in 2022 than previously estimated, according to Anderson’s forecast released Wednesday.
Because of the omicron option, Anderson Forecast economists have revised their forecasts for how long the initial coronavirus outbreak in 2020 will hit California’s job market.
“The potential economic impacts of the omicron option pose a risk of a downgrade to our outlook,” economists at UCLA Anderson said in a new report on the California economy.
Bottom line: California’s economic outlook looks weaker than it was just three months ago, according to a new estimate prepared by Jerry Nickelsburg, director of UCLA Anderson Forecast, and Leila Bengali, forecast economist.
“The new winter wave of infections should slow the rate of recovery over what we expected in our September 2021 forecast,” Nickelsburg and Bengal wrote in their new California projections.
This September, Anderson’s forecast predicted that California will average 17.23 million jobs in 2022. According to the December forecast, 17.21 million jobs will be created across the state next year.
Total jobs are expected to grow 4.7% in 2022, a weaker growth rate than September’s forecast of 4.9% jobs growth next year.
California’s projected unemployment rate for 2022 is expected to average 5.6%, unchanged from the forecast released in September.
However, in 2021, the unemployment rate is expected to average 7.7%, slightly worse than the 7.6% statewide unemployment forecast released in September, according to UCLA Anderson Forecast.
Economists also warned that inflation will erode personal income in California next year and the next year.
“Inflation will reduce real personal income to some extent,” Nickelsburg and Bengali wrote in their forecast.
Real personal income, adjusted for inflation in California, is expected to grow 2.6% in 2021 but decline 2.2% in 2022.
Much of the inflation-adjusted decline in personal income is due to a projected 4% rise in consumer prices in 2021, followed by an even sharper 4.1% rise in 2022.
In other words, personal income will not keep pace with rapidly growing inflationary pressures.
The uncertainty facing the California economy is not expected to ease until the coronavirus and its variants are finally brought under control and become little more than a minor health threat.
“The rise in cases will lead to a contraction in economic activity in some sectors as consumers are more cautious about or withdrawing from personal activities and travel,” economists at Anderson Forecast said. “Job growth will be slower in sectors with high levels of personal contact and in sectors serving tourists.”
Economists have warned that the statewide employment sector will not improve until at least mid-2022.
“We expect some setbacks in the state’s job market late this and early next year,” economists predict.