Associated Press

LOS ANGELES (AP) _ California will outpace the nation in job growth over the next two years as it recovers from recession, but the state still hasn’t reached its potential, according to the UCLA Anderson Forecast released Thursday.

California will add about 700,000 payroll jobs through 2016, and the growth rate of around 2.2 percent will be slightly faster than the 1.9 percent rate for the U.S. as a whole, said Jerry Nickelsburg, chief economist for the Anderson Forecast.

Californians’ personal income will grow by about 4.5 percent over the next two years, according to the forecast.

International trade, mainly from Asia, will boost California’s economy by increasing demand for transportation, warehouses and export manufacturing, the economists predicted.

The state’s unemployment rate, which was 7.4 percent in July, is projected to dip to 5.7 percent by the end of 2016 _ only one-third of a percentage point above the national figure, the forecast said. That compares with a 1.5 percent gap last year and 1.3 percent this year.

“We’re closing that gap,” Nickelsburg said.

California currently has around 15.5 million payroll jobs _ the most since before the Great Recession, when the total hit 17 million.

But the state remains “about 1 million jobs shy” of its potential employment considering its growing population, Nickelsburg said.

Many people have become discouraged and have given up job hunting, while a large population of young people means many haven’t yet found employment, he said.

The forecast predicts “slow, steady and unexceptional growth” in the economy rather than lightning leaps.

“That we are entering the sixth year of expansion illustrates just how painfully plodding this recovery process has been,” the report says.

California has been one of the top states in the rate of job creation thanks to its technology industries, but the economy suffered greatly from the housing crash, Nickelsburg said.

“We had a big housing bubble, and that drew a lot of people into construction as builders tried to build houses to meet that demand,” he said. “And, of course, that demand went away and with it went the jobs.”

Home prices, which have been rising with recovery, will continue to jump due to limited supply because the number of foreclosures has dropped from recession-era highs and fewer new homes are being built, the forecast says.

“However, construction permits have been increasing, and our expectation is that this will continue through the forecast horizon,” it says.

The forecast predicts the state and the U.S. will see a 5 percent increase in construction of new homes next year.