The latest forecast from University of the Pacific says the Central Valley and Bay Area will reach pre-recession employment levels this year.
The forecast from University of the Pacific says the state's unemployment rate will fall to 5.5 percent by 2017.
Dr. Jeff Michael with the school's Business Forecasting Center says the health services sector has been the only consistent bright spot during the recession. Now other sectors are recovering.
"The state and local government is not a drag on the economy the way it used to be and so is actually adding some jobs and economic activity," says Michael. "That takes away a big negative. We've had some big improvements in housing prices that have helped support household wealth and reduce foreclosures."
Michael says construction jobs will account for about a quarter of the one-point-three million jobs California will add in the next four years.
"Any slow down in the Bay Area would be felt here -if there's any sort of disruption into the tech economy -not something that we're forecasting. But, you know we've seen it before. It's unclear if the kind of booming growth that's been experienced there can be sustained at those levels."
Michael says the unemployment rate in Stockton, Modesto, and Merced is expected to stay at least three points higher than the state's unemployment rate.
The forecast calls for improving housing prices in California, but a modest increase of new housing construction.