The forecast also had an optimistic view on inflation.
"Feler writes that much of the recent increase in inflation is related to higher oil prices, as demand has recovered more quickly than supply," the press release said. "He forecasts that supply will start catching up, meaning that oil prices will come down and act as a deflationary force against inflation in other goods and services."
The report also noted that price increases in some areas of the economy, such as the used car industry, have already eased.
"The catch-up for prices of in-person services appears to have run its course,” the forecast said. “This doesn't necessarily mean that prices will come down, [according to Feler], but they will stop increasing at the rate they have over the past year.”
The school's forecast for the California economy reflected the outlook for the nation.
"In a slight change from the projections they issued in September, the economists now expect the economy to be somewhat weaker in late 2021 and early 2022 before picking up in mid-2022, although the potential effects of the Omicron variant represent a downside risk to the forecast," the press release said.