The UCLA Anderson Forecast says that the recession will end this quarter, but its negative impact will be felt over the next decade. The report points to huge consumer debt as the root of the recession and says consumer spending will be a key factor in its recovery. Senior Economist David Shulman says that economic growth is beginning after four quarters of decline. He estimates that the Gross Domestic Products will increase by 2.1% during this quarter and by slightly more in the fourth quarter of 2009. Growth will continue, according to experts, throughout 2010 and by the end of the year Americans can expect noticeable improvement. California, one of the states hardest hit by the recession, may be a little slower to recover.
The report says that California will also begin to turn around, but possibly slower than the rest of the country. In fact, experts predict unemployment rates will continue to rise by several percent in 2009. The report says that California’s unemployment won’t drop below double digits until the end of 2011.
Shulman says recovery will be slow throughout the country and will depend significantly on two factors: exports and residential construction. He blames a two decade spending spree that began with rising stock prices and continued with skyrocketing home prices is over. Now, rather than relying on rising asset prices, consumers will be forced to save more and consume less. “Credit impaired lower income consumers can’t spend the way they used to and wealth impaired affluent consumers won’t,” writes Shulman.