US gross domestic product is expected to grow at an annual rate of 28.3% in the third quarter, although there are caveats, according to the University of California Los Angeles Anderson Forecast released today. GDP had declined by 31.4% in the second quarter, according to the latest federal estimate that was also released today.

The UCLA Anderson forecast in June said the US economy was in a recession, but today’s forecast is more upbeat.

Senior Economist Leo Feler and Forecast Director Jerry Nickelsburg cite a number of factors for the increase in optimism including:

• The economy reopening more quickly than anticipated
• Limited restrictions in many states despite a surge in Covid-19 cases
• The quick adaptation by many consumers and businesses to virtual interactions and safe physical distancing
• Unprecedented monetary support by the Federal Reserve
• The fiscal stimulus approved early in the crisis

Still, there are concerns going forward in term of future quarters.

“Our forecast assumes either widespread availability and usage of an effective vaccine in early 2021 or that the pandemic’s impact on economic activity abates and is relatively mild in 2021 and 2022,” Feler and Nickelsburg wrote. “It also assumes another, more limited round of fiscal stimulus before the end of the year. None of these assumptions is assured, and if they do not come to pass, our forecast … is too optimistic.”

They also cautioned people not to be fooled by 28.3% annualized growth projected for the third quarter when comparing it to the second-quarter decline of 31.4%.

The 31.4% decline "is from a much higher base than the 28.3% recovery,” according to Feler and Nickelsburg.

In addition, they cautioned that the speed of the US recovery resulted in some of the growth not expected until next year to be pulled forward into this year. That means a weaker 2021.

In terms of unemployment, the new forecast projects the US will end this year with a 7.8% jobless rate and the rate will decline to 6.3% at the end of 2021 and 4.7% at the end of 2022. It will not reach pre-pandemic rates until at least 2024.

A companion report by Economist William Yu also looked at the impact of the gig economy on Los Angeles County alone. In this case the gig economy is defined only as independent contractors, freelancers and self-employed workers who report their income returns on form 1099-MISC — a different definition than that used by SIA which defines the gig economy as all contingent work.

Yu noted the employment rate in Los Angeles County declined by 19% since Covid-19 hit the economy in March, but the decline would have been 12% leaving out gig economy workers and counting only those with payroll jobs.

He also noted these workers are very diverse. There are 15,000 independent lawyers in Los Angeles County earning an average of $92,000 per year; there are 83,000 independent artists and writers earning an average of $46,000; and 70,500 Uber and Lyft drivers earning an average of $22,100. Another finding: Gig workers in the “professional, scientific and technical sector” earn $52,000 on average compared to tech workers in the conventional economy who earn $142,000 annually.

These types of workers have been increasing as a percentage of the labor force in Los Angeles County, according to Yu. The ratio of these workers to payroll jobs increased to 24.5% in 2018 from 19.3% in 2005.