UCLA Economists 'Tear Up' 2020 Forecast and Revise GDP Down Due to COVID-19

Tami Abdollah

Tami Abdollah was dot.LA's senior technology reporter. She was previously a national security and cybersecurity reporter for The Associated Press in Washington, D.C. She's been a reporter for the AP in Los Angeles, the Los Angeles Times and for L.A.'s NPR affiliate KPCC. Abdollah spent nearly a year in Iraq as a U.S. government contractor. A native Angeleno, she's traveled the world on $5 a day, taught trad climbing safety classes and is an avid mountaineer. Follow her on Twitter.

UCLA Economists 'Tear Up' 2020 Forecast and Revise GDP Down Due to COVID-19

University of California, Los Angeles economists tore up their quarterly March 2020 economic outlook as COVID-19 anxiety took hold of the American public and the novel virus spread through dozens of states.

The updated 104-page UCLA Anderson Forecast, released early Thursday, revised their earlier forecast of 2% for real GDP growth to a low 1.5% on a fourth-quarter-to-fourth-quarter basis, as they took a "midpoint between coronavirus having a very minimal effect to it causing a full-blown recession."

The economists, who clearly hedged their bets amid calls by some that the coronavirus is a black swan event, anticipated a hit to real GDP in the second and third quarters of the year with modest increases of 1.3% and 0.6%, respectively, rather than the 2%-plus growth earlier anticipated, and noted that "time will tell."

"We tore up the forecast, we did the second one, and if we had to do it again today, we'd redo it again drastically," said David Shulman, senior economist for UCLA Anderson Forecast, in a phone interview with dot.LA on Tuesday evening.


The most recent forecast was based on numbers run at the start of March, which did not include the impacts of a price war between Saudi Arabia and Russia that drove down the price of oil, Shulman said.

Courtesy of the UCLA Anderson March 2020 Economic Forecast

The impact of that battle is likely to trigger a far bigger manufacturing collapse than the forecast anticipated given that the U.S. is the largest oil producer in the world at 13 million barrels a day, Shulman said. The drop in prices will have especially dire consequences for the American southwest and North Dakota regions.

Shulman said the quarters of more modest growth that were anticipated might as well be "minus signs instead of plus signs" because of this change. "That pushes us into a recession or really close to it," he said.

The forecast had already taken an overall pessimistic view of 2020, given China's significantly greater impact on global supply chains and the economy than its impact during the SARS epidemic, which started some 17 years ago. At the time China's GDP share of the world was 4% and now it is 16%, the report states.

"We view the COVID-19 epidemic and likely pandemic to work as both a supply shock and a demand shock on the economy," the report states because both factories are shut down and the demand for travel, hotel and other services has also dropped.

The report estimated the international tourism loss to be around $4.3 billion a month to the U.S. With California accounting for 21% and Los Angeles for 12% of total international tourism revenue in the United States. But because Chinese and other Asian tourists are more likely to head to California and L.A., the economists assumed their market share to be higher -- at 42% and 24% respectively. The anticipated economic impact on California is therefore $1.8 billion a month and on Los Angeles, $1 billion a month.

China has been working hard to reopen factories but the forecast noted that a fraction of production capacity had resumed over concerns of a resurging outbreak, which has slowed the pace of resumption. That means that the U.S. could start to see a "significant supply chain disruption" in mid-March if cargo ships from Asian ports aren't sufficient for the American market and people run out of inventory, the forecast states.

That's especially problematic given how centralized global supply chains of, for example, pharmaceutical products, appear to be. Many Americans are unaware that their prescription drugs are from there, according to testimony cited in the forecast from a hearing of the the U.S.-China Economic and Security Review Commission in July 2019.

Shulman said that actions taken by the Trump Administration and the Federal Reserve are better than nothing, but "monetary policy is neither a cure nor a vaccine for COVID-19."

He wrote in the report: "It cannot reopen factories in China or Italy, and it cannot convince frightened people to travel. But it might reduce fears that something worse could happen to the economy and might alleviate the pain of stressed businesses facing supply-side shortages."

The report did have one bright spot: A revised forecast for housing starts that went up from 1.25 million units a year to 1.35 million units a year. The report chalks that up to rising income and low fixed-rate mortgages. However, the report expects 117,000 net new units to be built in 2020, and states that "the prospect for the private sector building out of the housing affordability problem over the next three years is nil."

"Rising income and the allure of 3.25% 30-year fixed rate mortgages are beginning to overcome the supply constraints caused by local zoning," the report says.

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Do you have a story that needs to be told? My DMs are open on Twitter @latams. You can also email me at tami(at)dot.la, or ask for my Signal.

tami@dot.la

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Genies Wants To Help Creators Build ‘Avatar Ecosystems’

Christian Hetrick

Christian Hetrick is dot.LA's Entertainment Tech Reporter. He was formerly a business reporter for the Philadelphia Inquirer and reported on New Jersey politics for the Observer and the Press of Atlantic City.

Genies Wants To Help Creators Build ‘Avatar Ecosystems’

When avatar startup Genies raised $150 million in April, the company released an unusual message to the public: “Farewell.”

The Marina del Rey-based unicorn, which makes cartoon-like avatars for celebrities and aims to “build an avatar for every single person on Earth,” didn’t go under. Rather, Genies announced it would stay quiet for a while to focus on building avatar-creation products.

Genies representatives told dot.LA that the firm is now seeking more creators to try its creation tools for 3D avatars, digital fashion items and virtual experiences. On Thursday, the startup launched a three-week program called DIY Collective, which will mentor and financially support up-and-coming creatives.

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Here's What To Expect At LA Tech Week

Christian Hetrick

Christian Hetrick is dot.LA's Entertainment Tech Reporter. He was formerly a business reporter for the Philadelphia Inquirer and reported on New Jersey politics for the Observer and the Press of Atlantic City.

Here's What To Expect At LA Tech Week

LA Tech Week—a weeklong showcase of the region’s growing startup ecosystem—is coming this August.

The seven-day series of events, from Aug. 15 through Aug. 21, is a chance for the Los Angeles startup community to network, share insights and pitch themselves to investors. It comes a year after hundreds of people gathered for a similar event that allowed the L.A. tech community—often in the shadow of Silicon Valley—to flex its muscles.

From fireside chats with prominent founders to a panel on aerospace, here are some highlights from the roughly 30 events happening during LA Tech Week, including one hosted by dot.LA.

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PCH Driven: Director Jason Wise Talks Wine, Documentaries, and His New Indie Streaming Service SOMMTV

Jamie Williams
­Jamie Williams is the host of the “PCH Driven” podcast, a show about Southern California entrepreneurs, innovators and its driven leaders on their road to success. The series celebrates and reveals the wonders of the human spirit and explores the motivations behind what drives us.
Jason Wise holding wine glass
Image courtesy of Jason Wise

Jason Wise may still consider himself a little kid, but the 33-year-old filmmaker is building an IMDB page that rivals colleagues twice his age.

As the director behind SOMM, SOMM2, SOMM3, and the upcoming SOMM4, Wise has made a career producing award-winning documentary films that peer deep into the wine industry in Southern California and around the world.

On this episode of the PCH Driven podcast, he talks about life growing up in Cleveland as a horrible student, filmmaking, Los Angeles and his latest entrepreneurial endeavor: A streaming service called SOMMTV that features–what else?–documentaries about wine.

The conversation covers some serious ground, but the themes of wine and film work to anchor the discussion, and Wise dispenses bits of sage filmmaking advice.

“With a documentary you can just start filming right now,” he says. “That’s how SOMM came about. I got tossed into that world during the frustration of trying to make a different film, and I just started filming it, because no one could stop me because I was paying for it myself. That’s the thing with docs,” or “The good thing about SOMM is that you can explain it in one sentence: ‘The hardest test in the world is about wine, and you’ve never heard about it.’”

…Or at least maybe you hadn’t before he made his first film. Now with three SOMM documentaries under his belt, Wise is nearing completion of “SOMM4: Cup of Salvation,” which examines the history of wine’s relationship with religion. Wise says it’s “a wild film,” that spans multiple countries, the Vatican and even an active warzone. As he puts it, the idea is to show that “wine is about every subject,” rather than “every subject is about wine.”

For Wise, the transition to launching his own streaming service came out of his frustration with existing platforms holding too much power over the value of the content he produces.

“Do we want Netflix to tell us what our projects are worth or do we want the audience to do that?” he asks.

But unlike giants in the space, SOMMTV has adopted a gradual approach of just adding small bits of content as they develop. Without the need to license 500 or 1,000 hours of programming, Wise has been able to basically bootstrap SOMMTV and provide short form content and other more experimental offerings that typically get passed over by the Hulus and Disneys of the world.

So far, he says, the experiment is working, and now Wise is looking to raise some serious capital to keep up with the voracious appetites of his subscribers.

“Send those VCs my way,” Wise jokes.

Subscribe to PCH Driven on Apple, Stitcher, Spotify, iHeart, Google or wherever you get your podcasts.

dot.LA reporter David Shultz contributed to this report.

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