U.S. economy will remain weakin the near-term and inadequate workforce development is the "realMain Street problem," according to a forecast report released hereWednesday.

In its second quarterly report of 2012, the University ofCalifornia, Los Angeles (UCLA) Anderson Forecast's outlook for theU.S. says that Gross Domestic Product (GDP) and job formation inthe U.S. will remain weak in the near-term, mirroring conditionsthat have prevailed for the last two years.

GDP growth is forecasted to be 2.4 percent by the end of 2013,increasing to 3.4 percent in 2014. The unemployment rate by the endof 2013 should be 7.7 percent. The forecast assumes that theFederal Reserve cannot risk a rate increase, particularly if thenation experiences the forecasted inflation rate of 1.6percent.

In California, slow and steady gains are anticipated throughout2012. More accelerated growth in 2013 and 2014 could seeCalifornia' s unemployment rate decrease to 7.7 percent by the endof 2014, which is within 0.6 percent of the U.S. rate.

The most impressing part of the report is the analysis by UCLAAnderson Forecast Director Ed Leamer, who speculates the economicfactors will become the engines of growth for the U.S. economy. [In the report titled "Wall Street, K-Street or Main Street? Who CanSave US?", Leamer suggests that the "distraction" is caused byfocusing on the financial sector (Wall Street) and the federalgovernment (K-Street) is causing most to miss the "real Main Streetproblem." That is the inadequate workforce development for 21stcentury labor markets.

"Which Street can save us? Wall Street, K-Street or Main Street?Which Street can do something dramatic to make the U.S. economy goagain at full throttle, put Americans back to work and give us allsome big raises again?" Leamer asked.

Leamer said neither Wall Street and the U.S. financial systemnor K-Street saved the U.S. economy.

"I think the problem lies elsewhere and is deeper and morelong-lasting than many imagine. Excessive focus on Wall Street andK Street is distracting us from the real Main Street problem --inadequate workforce development for the 21st Century labormarkets," said Leamer.

He said this problem is not entirely new. Four decades ago, newcompetition for American physical labor started to emerge. In the1960s, robots and automation appeared. In the 1970s, it was farawayforeigners.

That was tough on the blue-collar workers but white-collarworkers generally did well. They kept their jobs and receivedincreases in real earnings because all that competition lowered thecost of manufactured "tradables" and labor-intensive localservices, according to Leamer.

But there has emerged a very real threat to those white collarworkers -- the microprocessor, Leamer said.

"Every day there is a job in your neighborhood being done by amicroprocessor. In the near future, every mundane and modifiabletask will be performed either by low-wage workers in developingcountries or by robots or microprocessors. As a consequence, theglobe is suffering from a serious glut of workers who are able todo only the mundane physical and intellectual tasks," according toLeamer.

"The solution is developing workforce. We have to accept thefact that two bubbles have disguised the inferior quality of oureducational system. Good jobs in the United States in the 21stCentury will require humans to do things that are not suited to thecapabilities of faraway foreigners, robots or microprocessors,"Leamer said.

"We need a workforce that can think creatively and solve the newproblems, not merely recall the solutions to old problems. Even thehigh-quality 20th Century high school education isn't enough anymore, not to mention the high school dropouts, the nearlyilliterates or innumerate high school graduates," according toLeamer.

But Leamer expressed that there was another critical workforcedevelopment problem. After graduation, workers really begin tolearn what the work is all about from their first job.

"The second failure of our national workforce development isplummeting employment to population ratios of our youth," saidLeamer.

The transition from industrial to post-industrial economy is oneof two structural adjustments. The other one occurring at the sametime is the shift from a spending society to a saving society, asindividuals and governments at every level try to get their balancesheets in line with their future retirement obligations, Leamersaid.

Leamer stressed that the U.S. should focus more on manufacturingthan shopping.

"If the consequent weak demand from consumers and governments issomehow going to be replaced, the most likely component of GDP isexports. Metaphorically skeaking, we need to turn our shoppingmalls into factories," said Leamer.

UCLA Anderson Forecast is one of the most widely watched andoften-cited economic outlooks for California and the U.S.. It wascredited as the first major U.S. economic forecasting groupdeclaring the 2001 recession. Enditem