UCLA Anderson Forecast: Coronavirus Plunges US Into Recession, California Will Be Severely Hit

LOS ANGELES (CBSLA) — The U.S. economy has entered a recession, ending the expansion that began in July 2009, according to a revised UCLA Anderson Forecast.

The year started out strong, but the escalating effects of the coronavirus pandemic in March reduced the first-quarter 2020 forecast of GDP growth to 0.4%, the revised forecast said.

GDP is expected to slow by 6.5% in the second quarter and by 1.9% in the third quarter, according to the forecast, with a rebound of 4.0% in the fourth quarter — assuming the pandemic ends and normal activity resumes.

The coronavirus outbreak has impacted nearly every facet of American life, shutting down schools and forcing businesses to have employees work from home. The tourism industry has been particularly hard-hit, and leisure activity across the nation is grinding to a halt, with much of the San Francisco Bay Area ordered to shelter in place and Los Angeles ordering the closure of most leisure activity, including bars, clubs, bowling alleys, movie theaters and dining inside restaurants.

Business appears slow at the Naples Ristorante e Bar restaurant in Downtown Disney District shopping mall, which remains open on the first day of the closure of Disneyland and Disney California Adventure theme parks as fear of the spread of coronavirus continue, in Anaheim, California, on March 14, 2020. - The World Health Organization said March 13, 2020 it was not yet possible to say when the COVID-19 pandemic, which has killed more than 5,000 people worldwide, will peak. "It's impossible for us to say when this will peak globally," Maria Van Kerkhove, who heads the WHO's emerging diseases unit, told a virtual press conference, adding that "we hope that it is sooner rather than later". (Photo by DAVID MCNEW / AFP) (Photo by DAVID MCNEW/AFP via Getty Images)

The forecast says the economic downturn will be more severe in California, because it has a larger proportion of the tourism industry and trans-Pacific transportation. The Golden State's unemployment rate is expected to rise to 6.3% by the end of the year, and continue going up into 2021 to 6.6%. By the first quarter of 2021, the forecast predicts California will lose more than 280,000 payroll jobs, with a third in the leisure and hospitality sectors, and transportation and warehousing sectors.

The authors of the revised forecast say it comes with an important caveat — if the pandemic is worse than assumed, then it will be too optimistic.

The revision is the first in the forecast's 68-year history published an update between its scheduled quarterly releases. The revised forecast was developed with a review from the 1957-58 H2N2 influenza pandemic.

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