LOS ANGELES—The nation and California are positioned for a stable 2015, according to the latest UCLA Anderson forecast. While the report shows that unemployment rates will continue to decline and corporate and consumer spending will grow, helping to fuel economic growth, William Yu, an economist at the UCLA Anderson Forecast, explains that we really need multifamily development in major markets throughout the country, especially in Los Angeles.

“Multifamily development in most metropolitan areas is the main trend, and it is the right trend,” Yu tells GlobeSt.com. Although from a broad perspective he said that there were no major areas of concern in the economy for 2015, he does see an immediate need for multifamily development. “Los Angeles has the highest home price appreciation over the past 14 years compared with other major US metropolitan areas. I think one of the key reasons, which is usually over looked, is because Los Angeles has one of the lowest home supplies compared with similar markets,” Yu adds. “If we want Los Angeles to grow, we really have to change the mentality. Right now, Los Angeles is very flat. I would say that high density for cities is good because you increase home supply; young people will be more likely to come here; and business will be more likely to start here. In the past, we have developed out, but we have reached the limit. Now, the only place we have to develop is up.”

Overall, the forecast predicts that national economy will grow at 3% and the unemployment rate will decline to about 5%. The national economy will generate 200,000 to 260,000 jobs next year with employment compensation increasing to 3.2% in 2015 and 3.9% in 2016. California's unemployment rate will decline steadily throughout 2015, meaning that by the end of 2016, it will be nearly identical to the national unemployment rate at 5.3%. Personal income will grow by 4.5% over the next two years, and payrolls will continue to grow steadily.

The most significant economic event noted by the forecast is the decline of oil prices from $100 per barrel to $75 in the last quarter, and since the publication of the forecast, oil prices have declined even further. However, Yu says that it is no cause for concern because declining oil prices will only help to fuel consumer spending. “By our analysis, declining oil prices are good for the US economy, even though we have seen some stock market downturn because of plunging oil prices,” says Yu. “I would say that is a short-term event; the stock market is very volatile. In the long run, declining oil prices are good for the US economy because the consumer will have more money to spend.”

When asked if he had any other concerns about the state of the economy over the next year, Yu said no; however, he did mention a possible tech bubble developing in 2015. “We do have some concerns about a bubble developing in Silicon Valley with the high-tech and social media companies. Even if that does happen, though, in the future, it would be a small event that wouldn't affect the whole economy.”