California’s economy will grow faster this year than the national economy, and unemployment will drop to 5% in early 2017, according to a new report by the UCLA Anderson Forecast.

Personal income in California will increase more slowly than it has in recent years, when the state’s economy was bouncing back from the high unemployment of the recession.

In 2016, personal income in California will grow 3.6%, compared with 4.5% in 2015, the report said.

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“It’s not worrying. It’s actually an encouraging sign,” said Jerry Nickelsburg, an economist at UCLA and coauthor of the report. “The fact that we are getting close to full employment means we should be growing at a slower rate, unless there is a faster growth in innovation and capital accumulation.”

Unemployment is expected to hit 5% in the first quarter of 2017, he said. The jobless rate in California was 5.5% in February.

Wages and salaries in the state, not adjusting for inflation, will grow about 5.7% this year, according to the projections. That’s down from 7.5% last year. That means Californians will earn $60 billion more in wages than in 2015.

Total employment, which has been growing at more than 2% since 2012, will grow 1.9% this year, and tick down to 1% growth in 2017.


The U.S. economy overall will expand 2.7%, the report said. UCLA economist David Shulman said concerns about a recession “have subsided.”

Financial markets, which were volatile the first two months of the year, have calmed. That could change and U.S. growth could be hampered if Britain decides to leave the European Union, the report said.

Shulman also said that extreme rhetoric in the presidential campaign raised the specter of upending the global system of trade. “Trade wars usually do not lead to prosperity,” he noted in the report.

natalie.kitroeff@latimes.com


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