Home prices in California are expected to stabilize next year, but the state's economic woes will continue, due to rising unemployment, declining consumer spending, and other factors, according to the latest UCLA Anderson Forecast released Wednesday. In addition, the forecast says that, while the national economy is still not technically in a recession, several converging economic soft spots make it vulnerable to one going forward, and have put the economy in what it calls "stalled" status.
"What we are describing is an economy operating at its 'stall speed,' where any modest shock can trigger a full-blown recession," said UCLA Anderson Forecast Senior Economist David Shulman.
UCLA's analysis predicts a weaker economy for California than the U.S. as a whole in 2009, due to very sluggish home construction levels and related unemployment activity over the last year.
"We can expect 'doldrums' to be the operative word describing the California economy over the next 18 to 24 months," said Jerry Nickelsburg, UCLA economist and co-author of the report. Government layoffs and job losses, he said, will offset any benefits coming from the stabilization of real estate prices
