UCLA Anderson Forecast senior economist Jerry Nickelsburg reports that while the continuing drought will cause losses, particularly in agricultural sectors, the state will not be greatly affected economically. However, it may slow job growth if it persists over several years.
Nickelsburg still predicted that employment would grow 1.8 percent this year, 2.2 percent next year and 2.1 percent in 2016. The unemployment rate is expected to be 7.8 percent in 2014, 6.9 percent next year and 6 percent in 2016, although the rate should dip to 5.7 percent by the fourth quarter of 2016.
An analysis of past drought periods found no relationship with overall employment growth, although farm jobs are generally affected, according to Nickelsburg.
On the national front, Anderson Forecast senior economist David Shulman predicted a small rise in inflation, but increasing employment growth.
"We can visualize the economy creating between 200,000- 250,000 jobs a month with the unemployment rate dropping to 5.4 percent by late 2016," Shulman wrote in his report. "Growth will be led by housing, business investment and the consumer."
Shulman wrote that the harsh winter weather that slammed the East Coast slowed growth, but the economy will bloom in spring time, "bringing with it rising employment and wage gains."
City News Service contributed to this report