Economists at two schools agree on forecast for downturn.

For once they agree--for the most part.

Chapman University's historically more bullish economic forecasts on California's economy and UCLA's more bearish estimates are converging.

Last week, economists at both the smaller university in Orange and L.A.'s U.C. campus agreed that the slowing real estate market should pull the state's economy downward over the next two years, though not to the extent seen in recent history.

The likelihood of recession-size job losses remains small, but both the public and private sectors should be careful about their spending plans, according to Chapman.

State coffers grew in 2005 from the housing boom, sales taxes from rising oil prices and the continued recovery from the 2001 recession, a scenario Chapman predicts is unlikely to be repeated this year. Now, rising interest rates, shrinking housing affordability and inflation are putting the brakes on growth.

"Caution is the word for lawmakers, consumers and businesses," said Esmael Adibi, director of the A. Gary Anderson Center for Economic Research at Chapman, who projects that California's job growth will slow slightly from 1.6 percent in 2005 to 1.5 percent this year and I percent in 2007.

And while the U.S gross national product saw a hot 4.8 percent growth in the first quarter, the Chapman forecast says that's likely to cool to end at 3.6 percent for this year, and slow further to 2.8 percent in next year.

UCLA's Anderson Forecast, which also released its quarterly update last week, sees the state's economy at a tipping point, in which expected drops in real estate-related employment may or may not be offset by growth in other sectors, such as professional and business services.

Anderson anticipates that California will have nonfarm employment growth this year of 1.8 percent and 1.2 percent the next two years. That compares with a national rate of 1.5 percent this year, 1.1 percent next year and 1.3 percent in 2008.

UCLA economist Ryan Ratliff doesn't make a specific prediction about home prices but foresees a soft landing for the housing market compared to the sharp fall in prior decades.

"It seems unlikely that California would experience the 10-25 percent drop in nominal home prices that some observers have predicted without a major 1990s-sized recession," Ratcliff said in his report.

The Chapman forecast foresees the potential for depreciation--a position that Anderson had held last year. Chapman expects home prices are likely to appreciate by only 2.2 percent in 2006 and could fall by 6.4 percent in 2007.