SAN JOSE, Calif. — Coronavirus omicron uncertainties have prompted prognosticators with the UCLA Anderson Forecast to scale back their predictions for employment gains and total jobs in California during 2022, economists said Wednesday.
All of this means fewer payroll jobs in 2022 than previously anticipated, according to the Anderson Forecast that was released on Wednesday.
Due to the omicron variant, the Anderson Forecast economists have recalibrated their predictions for how long the original coronavirus outbreak of 2020 will afflict the California job market.
"The potential economic effects arising from the emergence of the omicron variant are a downside risk to our forecast," the UCLA Anderson economists stated in their new report on the California economy.
The bottom line: The outlook for the California economy appears more feeble than was the case just three months ago, according to the new assessment prepared by Jerry Nickelsburg, director of the UCLA Anderson Forecast, and Leila Bengali, an economist with the forecast.
"A new winter wave of infections ought to dampen the rate of recovery from what we expected in our September 2021 forecast," Nickelsburg and Bengali wrote in their new predictions for California.
In September of this year, the Anderson Forecast predicted that California would average 17.23 million jobs during 2022. The December prediction now calls for 17.21 million jobs statewide next year.
Payroll job totals are now expected to increase by 4.7% during 2022, which is a weaker rate of increase than the prediction issued in September for job growth of 4.9% next year.
The projected unemployment rate in California for 2022 is expected to average 5.6%, which is unchanged from the forecast view issued in September.
For 2021, however, the jobless rate is now expected to average 7.7%, which is slightly worse than the prediction released in September of a 7.6% statewide unemployment rate, according to the UCLA Anderson Forecast.
The economists also warned that inflation will erode personal income in California next year and the year after.
"Inflation will reduce real personal income to some degree," Nickelsburg and Bengali wrote in their forecast.
Real personal income — adjusted for the effects of inflation in California — is expected to increase 2.6% in 2021 but decrease 2.2% during 2022.
In large part, the contraction in personal income that was adjusted for inflation is due to the predicted increase in consumer prices of 4% in 2021, followed up by an even sharper rise of 4.1% in 2022.
Put another way, personal income won't keep up with fast-rising inflation pressures.
The uncertainties that confront the California economy aren't expected to abate until the coronavirus and its variants are finally seen to be under control and no more than a minor health hazard.
"A rise in cases will curtail economic activity in some sectors due to consumers pulling back from, or being more wary about returning to, in-person activities and travel," the Anderson Forecast economists stated. "Job growth will be slower in sectors with high levels of personal contact and in sectors that cater to tourists."
The economists warned that the statewide job sector won't improve until at least mid-2022.
"We expect some labor market headwinds in the state for the end of this year and early into next," the economists predicted.
