FILE - California beech restaurant

A beech bar in Capitola, California

(The Center Square) – With California's nearly 40 million residents living under a statewide "stay home" order from Gov. Gavin Newsom, the UCLA Anderson Forecast predicts a recession will hit the state this year, and impact the food service industry and small businesses the hardest.

Under Newsom's order, California residents are allowed to leave their homes only to buy food, pick up prescriptions, go to the doctor or to what is considered an essential job.

The report is the first the UCLA Anderson Forecast has published in 68 years outside of its regularly scheduled quarterly releases. The Forecast has been credited as the first major U.S. economic forecasting group to declare the recession of 2001.

“After the economy had experienced a solid start to 2020, the escalating effects of the coronavirus pandemic in March have reduced the first-quarter 2020 forecast of GDP growth to 0.4 percent,” the report states. “GDP for the second quarter of the year is now forecast to slow by 6.5 percent, and by 1.9 percent for the third quarter. With the assumption of an end to the pandemic and repaired supply chains by this summer, the Forecast predicts the resumption of normal activity in the fourth quarter of 2020 and a GDP growth rate of 4.0 percent.

“In 2021, with the abatement of governmental pandemic expenditures and the continued contraction of residential and commercial construction, the economy is forecast to grow at 1.5 percent,” it adds. “The full recovery and return to trend is now expected in 2022.”

The Forecast suggests that California’s recession will be more severe than other states and the nation overall because it has a “larger proportion of economic activity in tourism and trans-Pacific transportation.”

Employment is expected to contract by 0.7 percent in 2020, the report states. California’s unemployment rate will increase to 6.3 percent by the end of this year, and is expected to increase to an average of 6.6 percent in 2021, the Forecast predicts.

“By the first quarter of 2021, California is expected to lose more than 280,000 payroll jobs with more than one-third of those in the leisure and hospitality and transportation and warehousing sectors,” the report states.

California’s restaurant industry is the largest in the U.S., totaling more than $70 billion in annual revenue. The Forecast anticipates that the leisure and hospitality sectors will suffer a net job loss of roughly 100,000 people.