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Bleak House: State's Economic Outlook

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The word "doldrums" is being used to predict the economic health of California over the next 18-24 months, according to the author of a UCLA economic report that'll be released today. Very grim in its assessment of the California economy, the report predicts that even if housing prices stop falling next year--when the study predicts they will--"home prices will remain low as long as the state has a staggering inventory of unsold homes, growing unemployment and tight credit," according to the Los Angeles Times. The domino effect started by the housing collapse could hit industries including commercial building, high-tech manufacturing, tourism, and entertainment, while the $700 billion bailout plan (if implemented) would likely not help curb government layoffs and other job layoffs throughout the state. More explanation via the Times: "Edward Leamer, also an author of the report, said the housing turmoil did so much damage in large part because the economy is too dependent on consumer spending. 'The low rates of interest, the innovations in the financial markets and the tax cuts have turned us into a consumption-loving, debt-ridden, foreign-depending society,' he wrote in the forecast." Harsh words.
· UCLA economists issue gloomy California forecast [LA Times]