UCLA Anderson Forecast calls for dark days ahead

After completely missing the boat on the recession (and even doubling down last year on the premise that there would be no such thing), it seems that once presented with evidence to the contrary, the economists at the UCLA Anderson Forecast have climbed to the highest hills to shout "danger ahead!" So is this just PR-based histrionics to regain some credibility or do they have a point? From an L.A. Times story:

Wall Street may be seeing glimmers of a recovery, but UCLA economists are coming out with a new forecast today that offers a grim picture of the year ahead. Nationwide, the unemployment rate will worsen -- peaking late next year at 10.5%.

And in California, which has been battered by tumbling housing, retail and manufacturing sectors, the jobless rate will soar to 11.9% by mid-2010, the latest UCLA Anderson Forecast says...

In releasing their report, however, UCLA economists noted the challenge they faced in trying to forecast the future in the current volatile environment. With dramatic changes in federal policy occurring almost on a weekly basis and few historical parallels with which to compare the current recession, forecasts are being delivered in the most uncertain of times for economists...

Early last year, UCLA said the nation would suffer from tough economic conditions but would ultimately avert a recession. Leamer said that at the time, he did not believe consumer spending could tank the way it did in the latter part of 2008.

This time, the closely watched UCLA report does not hold back...

The financial crisis, they say, has swelled into such a global problem that national policy may be ineffectual. The United States needs its international trading partners to reverse their slowdowns and reignite the exchange of imports and exports.

Nationally, the UCLA forecasters say the economy will begin to grow slowly by the fourth quarter of this year. That's when residential construction should also begin to turn around, but exports will continue to slide downward until the beginning of 2010.

Consumer prices should snap out of a downward trend the second half of this year, but disposable income rates will not match the high levels of 2004 until 2011.

In California, the economy may stop shrinking by the fourth quarter, but it will remain flat and probably will not grow until the beginning of 2010. Normal growth won't return until the middle of 2010, and high unemployment will remain until 2012 or longer, the forecasters said...