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Midyear Forecast: Economy 'Shaking Off the Winter Chills'

April 25, 2014

Cal State Fullerton economists Anil Puri and Mira Farka gave a generally positive report during yesterday's Midyear Economic Forecast.

"Things are getting to the point we can be hopeful for the future," said Puri, dean of Mihaylo College of Business and Economics, who has been giving economic forecasts for more than 20 years. "Truly, this is the first year in quite a while we can feel upbeat about going forward. "

The national recovery has continued to expand, though the pace of growth has been below what they expected at this stage of the business cycle, Puri noted. Nevertheless, both economists pointed to four main reasons for their optimism:

  • Private sector is doing well
  • Housing rebound is continuing
  • Smaller impact from fiscal policy
  • Global and policy risks have receded

Puri pointed to the growth of the gross domestic product (GDP), which grew by 1.9 percent in 2013. "Going forward, we expect real GDP to expand at a faster clip over the next two years than it has in the recent past, but the pace of improvement will be a steady march rather than a gallop," Puri said.

Of possible concern, Farka explained that while overall employment is nearly as high as it was in December 2007, full-time employment is still 3.8 million positions below its prerecession peak. In addition, temporary employment has risen by 62 percent since the end of the recession.

Lastly, can the financial markets remain steady? The economists noted that the equity markets had a good run in 2013, with the market rising by 30 percent. Farkacalled those developments encouraging but worried that it could be "market froth," noting that the inflation-adjusted price-to-earnings ratio is above its historical average and margin debt has set historical highs.

Orange County and Southern California

The county's economic recovery is in line with and a bit better than the national trend. The Southern California region has also improved dramatically.

The full report is available online

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