Unemployment is expected to hover around 12 percent through 2012 and will fall through 2013, averaging at 11 percent, according to the report.
The high unemployment forecast is too high, said Brad Kemp, economist for Los Angeles-based Beacon Economics.
"What they're saying is there's going to be slow growth. I agree with that," Kemp said. "I think the estimated unemployment at 12 percent next year is a little unrealistic. Do I think that it's going to fall sharply? No. I think they are a little more pessimistic than we are as a firm."
Employment in California will see a 0.7 percent growth in 2012 and 2.1 percent in 2013
Employment growth in 2011 and 2012 will push unemployment down marginally and single digits are not expected until 2014, according to the report.
The forecast shows California split into two states, with coastal regions continuing to grow out of the recession while inland regions will remain stagnant.
The stall of the nation's economy has widened the gap between the two regions.
The coastal economy is led by exports and innovation communities while the inland economy is being held back by an overhang of excess housing and a contraction in government employment, wrote Jerry Nickelsburg, senior economist for the forecast.
Inland California faces continued high unemployment and a long slow recovery through 2017, according to Nickelsburg.
"It is not uncommon in the U.S. to see a formerly booming area turn into one of stagnation for long periods of time," he said.
Whereas, Coastal California has grown faster than the rest of the country during the stalled economy.
"We expect this to continue as (coastal California's) knowledge communities are an attractor of skilled labor and advanced manufacturing," Nickelsburg said. "If the recovery is more rapid than we are predicting, there could be spillover effects on (inland California.)"
Although the economic future is worse than previously reported, the country is not in a recession nor is there a recession in the forecast through 2013 because the three sectors that would normally send the economy into a recession are already depressed, according to David Shulman, senior economist for the forecast.
The three sectors include housing, consumer durables and inventories.
A new recession would come from a collapse in exports, a generalized decline in consumer spending with a resultant decline in business investment, which is not included in the forecast.
"Instead, we forecast economic growth to gradually rebound in mid-2012 with the economy growing at a modest 2.5 percent to 3 percent clip," Shulman wrote in the report. "The factors driving the return to growth include modest gains in exports, consumption and equipment and software investment."
Shulman said in the report that the economy has stalled, meaning it has not gone backwards into a recession nor is there forward momentum.
The outlook is far worse than three months ago, he said.
"In fact, given the surprisingly weak revised data for the first half of the year, we expect that in the five quarter period ending in the first quarter of 2012, economic growth will average a decidedly weak 0.9 percent," he wrote.
"If there ever were an economy operating at `stall speed,' this one is it."
Employment growth could see gains averaging about 150,000 jobs a month and the unemployment rate would fall to 8.6 percent by the end of 2013.
"Nevertheless, recession or not, the employment situation remains horrible," Shulman said. "Job growth has stalled and we forecast that the unemployment rate will soon rise to 9.5 percent, above August's elevated rate of 9.1 percent."