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Study: Strong Economic Recovery for Coastal Cities, Stagnant in Inland Areas

The gap between California's coastal and inland areas has continued to grow in recent months, with employment actually declining inland over the past year.

Credit: Getty Images
Credit: Getty Images

By City News Service

While California overall has made a strong recovery from the national recession, the recovery has been sharply divided between coastal areas, which have thrived and inland areas struggling to regain jobs, according to UCLA Anderson Forecast released Thursday.

Senior Economist Jerry Nickelsburg wrote in his report on California that the gap between coastal and inland areas has continued to grow in recent months, with employment actually declining inland over the past year.

"Along the coast from Marin to San Diego, including a sliver of Los Angeles County known as the Westside/Silicon Beach, California employment gains are outpacing the U.S.," Nickelsburg wrote. "Indeed, Silicon Valley over the past 12 months generated payroll employment at twice the U.S. rate. But move off the coast and the situation is quite different.

"The Inland Empire and Sacramento Delta areas are growing at a sub-par rate while the East Bay and San Joaquin Valley as well as smaller rural counties in the north and east are showing little to negative growth."

Nickelsburg said traditional economic engines in inland areas such as residential construction, manufacturing and government services were not moving in a positive enough direction to provide "even a modicum of recovery in much of the state."

He noted that there are some bright spots, including the new medical school at UC Riverside, which "will begin to generate higher education jobs as well as a cluster of health care-related jobs."

Overall, the forecast calls for total employment growth of 2.4 percent this year, 1.5 percent next year and 2 percent in 2015. Unemployment is expected to continue falling for the rest of the year and hover around 8.2 percent in 2014.

Nationally, Senior Economist David Shulman wrote in his report that the U.S. economy was continuing to grow, in spite of "self-inflicted wounds" caused by the 16-day partial government shutdown and botched rollout of the Affordable Care Act, known as Obamacare.

"Although real growth in the current quarter will likely be a modest 1.8 percent, we forecast that by the second quarter of next year, real GDP growth will be on a sustained 3 percent growth path," Shulman wrote.

Shulman said the economy will add about 200,000 jobs per month, dropping the unemployment rate to about 6 percent by the end of 2015.

"As long as the federal government does no harm, admittedly a dangerous assumption, the economy will be spurred by strength in housing and cars combined with an uptick in business spending and an end to the dramatic drop in federal purchases," Shulman wrote.

"... Policy interest rates will stay low throughout 2014, but with inflation rising to a bit above 2 percent, we expect that the zero interest rate policy of the Fed will come to an end in the spring of 2015," he wrote.

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