As it turns out, the entire U.S. economy has been suffering from seasonal affective disorder. According to the UCLA Anderson Forecast, the one-two punch of harsh winter weather in the East and a nagging drought in the West (namely California) stalled industries from real estate to factory production, putting a tight chokehold on the national economy.
However, according to its latest economic outlook report, released Wednesday, Anderson expects the national GDP to growth by roughly 3 percent now that warmer and wetter spring weather is on the way. Moreover, as the GDP rises, increased housing and business investments and consumer spending should keep that growth rate steady through 2016.
Accordingly, as the U.S. GDP grows, so should grow job opportunities and salaries. In March, Freddie Mac announced that it expects home sales to grow along with wages this year, despite a still-tough job market in most sectors. Mirroring UCLA's GDP predictions, Freddie is projecting a 3 percent rise in home sales and a 20 percent rise in new home construction in 2014, which the agency expects to level out to a 5 percent overall growth.
In the Wednesday report, UCLA Anderson Forecast senior economist David Shulman stated: "We can visualize the economy creating between 200,000 and 250,000 jobs a month, with the unemployment rate dropping to 5.4 percent by late 2016. Total payroll employment will surpass the prior 2007 peak, but the economy will remain well below its pre-Great Recession growth path."
Shulman's words echo Freddie's, which stated last month that construction and manufacturing jobs, though still struggling, are on a steady rise. Construction is roughly 80 percent of its 2007 peak and manufacturing at about 90 percent, according to Freddie.
Shulman also expects the core consumer price index to increase from 1.8 percent (its 2013 low) to 2.5 percent by 2016. This uptick in inflation, he said, should bring a corresponding—and much welcomed— rise in salaries nationally, as much as 4 percent this year. This, of course, bolsters a recovering housing market as more money and more stable jobs generate more interest in homebuying among U.S. workers.
Shulman also said that the Federal Reserve's long experiments with zero-interest rates and quantitative easing are slowly waning. He expects that the monthly bond buying program, once at $85 billion and now at $55 billion, will essentially ground to a halt by September. "We forecast that the Federal Funds rate will rise, to use 'Fedspeak,' at a measured pace, reaching 3 percent by the end of 2016," Shulman said.
Specific to California, UCLA Anderson Forecast senior economist Jerry Nickelsburg that the state's lingering drought choked its four main economic engines—agriculture, fisheries and the environment, households and industry—but not beyond what Californians are long used to.
"Overall, the state is not likely to be greatly impacted," Nickelsburg said. He expects the state's total employment to grow by more than 2 percent for the next three years.