Good, But Not Great, Rebound

Beacon Economics’ forecast for the U.S. economy continues to be optimistic - in the short run.

“We expect overall national growth to continue in the 2 percent to 3 percent range for the second half of 2010,” spokesmen said. “One reason is that a large proportion of Federal stimulus dollars have yet to hit the economy. As they find their way to Main Street, 2010 could end up being a very strong year.”

But that’s the short run, analysts added, and a solid 2010 does not necessarily mean the same for 2011 or 2012. Indeed, Beacon Economics is growing more pessimistic about the medium run:

Meanwhile, California-based Beacon Economics is forecasting that the Golden State’s unemployment rate will fall slowly from the peak it hit in the 2nd quarter of 2010 (12.6 percent), and remain above 10 percent through the end of 2011.

“We forecast that total nonfarm employment in the state will grow - but at an equally slow pace. Don’t expect employment in the state to reach its 2007 peak until 2015.” They said.

Today, the biggest risk facing California labor markets is the Federal Reserve being forced to raise interest rates to combat the threat of inflation - in turn having a negative effect on growth and hiring in 2011 and 2012.

“Like everything concerning the economy today, the future largely depends on the policy decisions being made in Washington” concluded Beacon.