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California Could See A Strong But Unequal Economic Recovery

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A server at Casa Vega wears a face shield and a face mask while working at the restaurant. (Chava Sanchez/LAist)
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Is a speedy economic recovery for California — and the rest of the country — in the cards? UCLA economists think so.

With mass vaccination underway and more business reopenings around the corner, the UCLA Anderson Forecast, published today, predicts national GDP growth of 6.3% this year after a 3.5% decline in 2020.

The study is also optimistic that jobless Californians will soon find work. It expects the state to return to a record low unemployment rate of 4.1% by 2023, after hitting a record high of 16% in April 2020.

The big picture may be hopeful but forecast director Jerry Nickelsburg worries that California's recovery will be uneven.

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He says the high-income tech industry will lead the state's rebound. Meanwhile, low-wage workers in the hardest hit sectors — including tourism, hotels and food service — could take the longest to recover.

"Inequality, which was getting worse in the last decade, absent policy interventions is going to become even worse in the next decade," Nickelsburg said.

The forecast also examines the much-hyped claim that workers are fleeing California in droves. They found scant evidence to back up the assertion.

Nickelsburg says remote work has given some Californians the option to leave high-cost cities for cheaper suburbs and smaller cities. And with college students not attending classes on campus, rents for apartments near universities have plummeted in many areas. But he says beyond the alarming headlines, the state’s economy isn't in danger of permanent damage from a mass exodus.

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