According to the latest economic forecast, California has exited the worst of the Great Recession, but faces another two years of a long, slow, and painful recovery. Jeff Michael, of the University of Pacific, has officially declared the recession to be over, based on certain economic metrics, but stated, “It’s going to feel like a recession for awhile longer.” LA economist, Chris Thornberg added, “In the long run, recovery in California is going to be solid..In the short run, it’s going to be weak.”
While job losses appear to have bottomed out, home prices appear to have ended their skid, and the manufacturing base appears to have rebounded a bit, high unemployment, an extremely weak residential housing market, a continuing crisis in commercial real estate, and $20 billion budget deficits will likely plague the golden state for another two years. Some economists are even warning of a “double dip” recession, similar to that of the second, major downturn during the Great Depression in 1937.
It’s far too early to assess whether or not California, or the United States for that matter, is entering a genuine recovery. Brief turnarounds and powerful bear market rallies occurred during the Great Depression and the early 1980s recession, only to falter months or years later. 2010 is a make or break year for the state, national, and global economy. As massive government stimulus programs run their course by mid-year, a fragile economy will face its most daunting challenge yet.