There are no big surprises in Jack Kyser's mid-year economic forecast, which projects nearly flat job growth in L.A. County this year (+0.1 percent) and slightly improved results in 2009 (+0.6 percent). Unemployment both years will be in the 6.2 percent-6.3 percent range. Those numbers are actually pretty good next to Riverside-San Bernardino counties, which will show negative job growth of 1.6 percent in 2008. OC is close to a recession, largely the result of the subprime meltdown (many of the top lenders were headquartered in OC).
In the past few years L.A.'s economy has fared a bit better than other portions of Socal, mostly because of its diversification. If one sector is on the skids, another could be strong. Of course things are so bad on so many fronts that diversification only gets you so far. Kyser, chief economist of the L.A. Economic Development Corp., says that the California economy is "on the brink of a recession," and that some parts of the state already are in recession. He doesn't see the housing problems really turning around until 2010, though L.A. and other pockets are doing better than most of the inland areas. Here's how the EDC views L.A.
--International Trade: Import volume should start to pick up.
--Technology: Military spending will be a plus.
--Tourism: International visitors are a big help.
--Major projects: Several big transportations projects mean more construction dollars.
--Housing: Not as big a problem as in other areas, but still a problem.
--Entertainment: Labor woes are a big question mark, says Kyser.
--Congestion: No explanation needed.
--Local government finance: Big budget problems.
The largest job losses will be in construction, finance and manufacturing, while the biggest gains will be in health services, government and professional services. Entertainment is the one area I take issue with, especially as it relates to the industry's labor problems. Job losses have been relatively limited so far, and it's not looking as if we'll see the actors go out on strike. Actually, entertainment, tourism and exports could help offset the negatives, at least to some degree. But oil has been and will continue to be the tipping point. If prices remain this high, you're looking at a minimum of six very tough months, probably closer to 12. Here’s the EDC release.