California's economy will rebound even more slowly than previously anticipated due to the economic slump in China, the recession in Europe and a sluggish upswing in the United States, researchers with the closely watched UCLA Anderson Forecast said Thursday.
Just three months ago, the Anderson Forecast predicted the statewide jobless rate would drop to 9.8 percent by the middle of next year. But it now says statewide unemployment will remain at or above 10 percent through mid-2013.
"The recovery in California is going more slowly than we had expected," said Jerry Nickelsburg, a senior economist with the group. "California is being affected because the U.S. recovery is going more slowly."
A fresh snapshot of the state's economy will arrive Friday when government officials release August employment reports for California and its metro areas.
Because of its booming tech industries, the Bay Area has been the strongest regional economy in California. Two of its three major urban centers, the South Bay and the San Francisco-San Mateo-Marin region in recent months have posted the fastest rate of annual employment growth in the entire country. East Bay job growth remains relatively feeble, however.
"Silicon Valley is a hugely bright spot and will remain so," said Edward Leamer, director of the Anderson Forecast. "San Francisco is doing well. The tech centers make those areas the healthiest economies in the state."
there are good reasons that regions with a strong technology base are doing much better than other areas.
"This tech surge is real," said John Silvia, chief economist for San Francisco-based Wells Fargo Bank. "People are spending money on smartphones, on tablets, on iPads, on equipment to interact and communicate with each other."
Despite the robust technology economy, the state and nation face serious economic headwinds, analysts said.
"Europe is in recession, China is slowing, many parts of Asia are slowing," said Jon Haveman, chief economist with the Bay Area Council's Economic Institute.
Nickelsburg added: "What happens in China matters to the California economy." He noted that during the second quarter of this year, China was California's second-biggest export market after Mexico, buying up 8.7 percent of the state's exports.
California and the nation also face long-term "structural" job losses in some industries that appear unlikely to reclaim their past pinnacles.
"We have permanently displaced workers in a variety of fields," Leamer said. "Manufacturing, construction, retail; a lot of those jobs are not coming back. This is a workforce that will have to find different industries, new skills, new aspirations."
But economists believe the technology boom won't vanish anytime soon.
"People want better communications, better software, better equipment," Silvia said. "That's what you make in Silicon Valley and San Francisco."
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