The economic surge in the Bay Area and other parts of California that's being led by the tech boom could create a "superstar" economy of haves and have nots, an economist said in connection with a new economic forecast that's being released Wednesday.

In their quarterly report, experts with the closely watched UCLA Anderson Forecast predict the current drought won't choke the economic upswing in California -- although the protracted dry spell could cause job growth to expand more slowly than initially anticipated.

While the issue of economic haves and have nots wasn't addressed in detail in the current report, Edward Leamer, an economist and director of the UCLA Anderson Forecast, warned in an interview with this newspaper the bifurcated economy.

"The drought isn't as big a worry as the jobs drought in parts of California right now," Leamer said. "The job market continues to be troubled in parts of the state."

Even within a smaller economic region such as the Bay Area, some huge disparities have begun to emerge in the fortunes of residents of the nine-county Bay Area, he noted: "Santa Clara County and San Francisco are booming, but the East Bay is still struggling along.".

"It's a kind of superstar economy," Leamer said. "Some people are getting some extraordinary jobs and being handed some extraordinary rewards. And there are some people who are being left out. This economy is great for the few, but not so great for middle class Americans."


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These issues could become more than theoretical debating points for economists. Leamer pointed to unrest and vandalism in places such as San Francisco and Oakland as evidence that some residents have begun to resent the economic divide in the Bay Area.

The distribution of well-paying jobs in the modern digital revolution is in stark contrast to prior ages of rapid economic transformation.

"During the Industrial Revolution, we built the middle class with well-paying factory jobs," Leamer said. "It's great if you work for Google, or Apple or Microsoft, or some other tech company. It's not so great for you if you don't."

Other economic experts agreed that the economic divide will generate more dislocation if it isn't addressed.

"The issues facing the middle class can be masked or ignored when you see gains in output, income and jobs being driven by relatively small numbers of individuals," said Jeffrey Michael, director of the Stockton-based Business Forecasting Center at University of the Pacific.

Contact George Avalos at 408-859-5167. Follow at twitter.com/georgeavalos

California forecast

The UCLA Anderson Forecast predicts gains in jobs, personal income and retail sales in California in coming years. Here's a summary of the key findings:
Total jobs in California will grow by 2.2 percent in 2014 and 2.3 percent in 2015
The jobless rate in California will average 7.8 percent during 2014 and 6.9 percent in 2015
Personal Income in the state will increase 3.1 percent in 2014 and 3.8 percent in 2015. (adjusted for inflation)
Taxable sales will increase 1.9 percent in 2014 and 2.4 percent in 2015.
Source: UCLA Anderson Forecast