The coronavirus imperils California’s record-setting economic boom, which faces the forbidding prospect of job losses this year, although the Bay Area and its vigorous tech sector are poised to withstand employment cuts, according to experts with a closely watched economic forecast released Thursday.
“We think that the risk that we will have job losses in California and the United States has gone up significantly,” said Jerry Nickelsburg, director of the UCLA Anderson Forecast, which unveiled its quarterly assessment of the economy on Thursday. “We have had a collapse of oil prices and a collapse of stock prices.”
The coronavirus pandemic has unleashed a widening wave of economic woes.
Among the impacts: The coronavirus effects have eviscerated shipping through West Coast ports such as the Port of Oakland and the cargo hubs in Los Angeles and Long Beach.
“The ports have pretty much ground to a halt on the West Coast,” Nickelsburg said in an interview. “The number of ships leaving China has dropped dramatically. Even when that starts again, it takes a month for a ship to get across the Pacific. The slowdown in the ports could last at least a couple of months.”
However, the economic and employment effects have gone well beyond the shipping of cargo.
Airlines have chopped both domestic and international flights. Professional sports leagues have drastically altered their operations. The NBA and NHL have suspended their respective seasons until further notice. Cruise line schedules have been shattered. Tourism and hotel stays have been hobbled.
“The interruption of trade will impact transportation and warehousing, and retail and wholesale trade,” Nickelsburg wrote in his part of the quarterly Anderson Forecast. “The interruption of travel will impact international tourism.”
However, the fallout from the virus will also intensify the demand for health care services and personal care products and services, which could heighten hiring in those sectors, the forecast stated.
“The Bay Area is not immune to this, but because Silicon Valley and the Bay Area are centers of Internet technology, this may be a region that is able to better weather this storm,” Nickelsburg said.
California’s pace of job growth, measured by a yearly basis, is expected to slow drastically, according to the new Anderson Forecast.
In 2019, nonfarm payrolls, the most commonly accepted measure of job gains or job losses, grew by 1.7 percent in California, the Anderson economists determined.
For both 2020 and 2021, payroll job totals in California are expected to grow by 1 percent, the Anderson Forecast said.
Similarly, personal income in California is expected to slump during 2020, according to the forecasters.
The average Californian’s personal income grew by 2 percent during 2019. But in 2020, personal income is expected to slow drastically to a growth rate of only 1.3 percent, and then rebound in 2021 to 1.7 percent, the UCLA Anderson Forecast estimated. The rates of growth were all adjusted for inflation.
However, taxable retail sales, also adjusted for inflation, look to be about to rebound, according to the forecast. That’s an indication that consumers are poised to up their spending this year and next.
In 2019, retail sales declined by 0.1 percent in California. But in 2020, they are expected to increase by 0.1 percent and then jump 1.8 percent in 2021.
Amid the gloom, the most hopeful signs sketched out by Nickelsburg appeared to include the prospect that the Bay Area could conjure up some measure of inoculation against the coronavirus woes.
After all, Silicon Valley has invented, commercialized, and distributed an array of products and services that enable more people to remain productive while they also curb their exposure to diseases that would be more readily transmitted in mass gatherings.
“There will be a demand for technologies that allow people to work from home or away from the office,” Nickelsburg said. “The Bay Area has some insulation because of the need for technologies to support distributed workforces.”
