What do rising inflation rates mean for Californians? UCLA weighs in

California's economy will likely continue improving as the year nears an end, but national economic doldrums have tempered expectations in the state for the next two years, according to a UCLA forecast released Wednesday.

On the national front, UCLA Anderson Forecast senior economist Leo Feler wrote in his report that the U.S. economy is "likely to muddle along" for the next 12 years, with continued inflation and slow growth.

"The UCLA Anderson Forecast does not expect a recession at this time, but the likelihood of a recession during the next 12 months has increased," he wrote.

According to Feler, based on "mixed-signals" economic data, "our consensus forecast is that we are not currently in a recession, nor do we think there is more than a 50% chance we will be in a recession during the next year."

"As bad as the economy seems in the U.S., it is worse around the world," Feler wrote. "With rising U.S. interest rates and global instability, investors have poured money into the U.S., causing the dollar to appreciate against other currencies. That appreciation causes U.S. exports to be more expensive around the world.

As the Federal Reserve has rapidly increased interest rates, many economists say they fear that a recession is inevitable in the coming months — and with it, job losses that could cause hardship for households already hurt worst by inflation.

Even before the Federal Reserve acts again Wednesday to sharply raise its key short-term rate — a third straight three-quarter-point hike is likely to be announced – its previous rate increases are being felt by households at all income levels.

The Fed's latest move is expected to raise its benchmark rate to a range of 3% to 3.25%, the highest level in 14 years. Its steady rate increases are making it increasingly costly for consumers and businesses to borrow — for homes, autos and other purchases. And more hikes are almost surely coming. Fed officials are expected to signal Wednesday that their benchmark rate could reach as high as 4.5% by early next year.