The Daily Bruin sat down with Michael Bazdarich, one of four
members of the UCLA Anderson School Forecast, to discuss the impact
of the Department of Labor’s report released last Friday. The
report, which was the last of its kind to be released prior to the
presidential election, showed an increase of 96,000 jobs in
September, an amount lower than many had hoped and
expected.
Daily Bruin: How will the slower-than-expected job growth
rate affect the economy?
Michael Bazdarich: Remember the slow growth rate is a reflection
of what the economy is doing, so Wall Street has been hoping that
the economy will pick up. We had pretty rapid growth of the economy
late last year and early this year, and Wall Street folks thought
you’d see the job numbers pick up last Friday in reflection
of that.
DB: What will be the political fallout, if any, from the
Labor Department’s report?
MB: It’s a possible opening for Sen. Kerry as the
Democratic challenger. He’s harped for quite a while that the
economy’s not expanding rapidly enough. These numbers give a
little weight to the Kerry attack. So there’s a possible
political fallout. We’ll just have to see. It depends on
whether the voters blame this sluggish growth on Bush, and whether
they think Kerry would do any better.
DB: What about the economic fallout?
MB: Not much, because again it’s not like the economy
picks up or slows down because of these job numbers. These job
numbers are picking up or slowing down because of what the
economy’s already doing. In terms of other fallout,
personally I think this is going to put further downward pressure
on inflation and further downward pressure on wages.
DB: Is it possible to briefly state where the Anderson
Forecast predicts the economy will be in the next few
years?
MB: Yes, we’re looking for modest growth ““ 3 percent
gross domestic product growth ““ for the foreseeable future,
and a steady unemployment rate. We don’t believe the growth
will be fast enough to lower unemployment.
DB: How does that vision compare with other leading
forecasters?
MB: Most of Wall Street is looking for a lot faster growth in
the economy than we are, and a lot more growth in jobs. We just
think Wall Street is dead wrong about that.
DB: What sort of effect will the report have on
UCLA?
MB: In terms of effects on UCLA on all of this, one of the major
factors pushing your tuition up of course has been the state budget
crises. And the governor and the Legislature are hoping for really
rapid growth in the economy that will push up tax revenues and
balance the budget for them so they can stop cutting back
everything and raising student fees. Our forecast is that
it’s not going to happen, and these numbers are consistent
with that. We’re just not generating enough growth in the
economy to come anywhere near balancing the state budget. The state
budget problems are going to be with us for awhile, which is going
to mean constant pressure everywhere in state government to cut
back on costs and raise money wherever you can.
DB: Why is it that higher education is easier to cut than
other services?
MB: You guys don’t vote as much! The one sacred cow in all
these budget deliberations has been medical, health and human
services. We really haven’t seen cuts in what the state is
doing in health care. Also, K-12 schools are ostensibly protected
by Proposition 98, it says that in effect K-12 and community
colleges are guaranteed about 41 percent of state revenues. Medical
is a big part of the state’s budget ““ I believe at
least 35 percent or so. So it’s a big area, and when you
haven’t made any cuts there, that means the cuts everywhere
else have to be so much bigger. That’s one of the reasons
higher education has been hit so far. Even there, when you look at
state funding for the UC and CSU systems, the spending I think is
still up a little bit. Whereas when you look at other areas of
spending, what the state spends on technology, what it spends on
commerce, I think what it spends on the court system, spending is
actually down in those areas over the last three years. So there
are some areas, in those terms, that have been hit even harder than
higher education.
Interview conducted by Colleen Honigsberg, Bruin Senior
Staff.