The latest analysis by the suggests that the recent slowing of the economy does not portend a national recession despite subtrend growth in the first quarter of 2024, which followed six months that exceeded the 2.5% average growth of recent years.
The economy, UCLA economists predict, will continue to experience subtrend growth in the second and third quarters of 2024, but recession alarm bells have been silenced in the face of expansionary fiscal policy, new national industrial policy and robust consumer spending. Inflation is slowly finding new equilibrium in the 2.2% to 2.7% per annum range, and the Forecast expects the Federal Reserve to take a neutral stance while economic growth rebounds to trend rates next year.
Still, the current growth pattern could be affected by the presidential election in November if the results usher in a different national economic policy in 2025, they say. Because of the uncertainty, the Forecast predicts weaker business investment in the third and fourth quarters of 2024, corresponding to a wait-and-see approach by some firms until after the election.
California’s robust economy grew at a 3.7% compound annual rate in 2023 — faster than all states except Washington, Florida and Texas. This year, however, the continued slowing of the national economy will affect the state. Weaknesses in specific sectors, as evidenced by the high unemployment rate, will contribute to 2024 being an atypical year of slower-than-U.S. growth for California, but Forecast economists say the following two years will be characterized by more typical, higher-than-U.S. economic growth.