Chamber BASIC Economic Forecast Luncheon
ECONOMIC FORECAST SAYS SOUTHERN CALIFORNIA WILL AVOID RECESSION
Pictured above is Chamber President Helene Simmons, LAEDC Chief Economist Jack Kyser, and Chamber Board Member Barbara Martine.
COMMERCE—Southern California will avoid recession, but some areas and industries face a “painful period,” and Orange County will slip into a “spot” recession on the employment front this year, according to the Los Angeles County Economic Development Corp. (LAEDC)
“The best way to describe the current business situation for the nation, state and region is that it is a ‘two-track’ economy,” said Jack Kyser, chief economist for the LAEDC, in releasing the group’s 2008-2009 Economic Forecast & Industry Outlook at the January Buy And Sell In Commerce (BASIC) Luncheon hosted by the Commerce Industrial Council Chamber of Commerce and held at Steven’s Steak & Seafood House in Commerce.
“The most distress will be in the Riverside-San Bernardino area and Orange County, with the latter actually in a ‘spot’ recession”—meaning two or more successive quarters of negative growth—“as measured by employment, during the first half of 2008,” he said.
The housing industry will continue its downward spiral, having its most profound impact on Riverside, San Bernardino and Orange counties, according to the LAEDC, which describes itself as the region’s premier business leadership organization.
Also casting a pall on the regional economy is the expected fallout from the recently ended Writers Guild of America strike, which cost the local economies $2.5 billion, Kyser said.
Additionally, Hollywood still faces labor negotiations with the Screen Actors Guild, and the entire coast will have to deal with the renewal of the Longshoremen’s contract this summer, he said.
But several industries will experience slow, steady growth. The “good news” category includes tourism, which will benefit from the declining value of the U.S. dollar, according to the forecast.
Professional, scientific and technical services, including defense technology, also will see growth, Kyser said, adding that public works projects like the Metropolitan Transportation Authority Gold Line extension and Exposition Boulevard light rail line should bolster economic activity,
“Technology should also record growth, although the LAEDC Forecast team has its fingers crossed over the receipt of more orders for the C-17 military cargo plane built by Boeing in Long Beach,” he said.
“While the economies of California and Southern California overall are not expected to fall into recession in 2008-2009, it will be a painful period for several industries and metro areas,” according to a statement accompanying the forecast.
Nationwide, the LAEDC forecast a Gross Domestic Product growth of 1.7 percent in 2008 and 2.5 percent in 2009.
California will see nonfarm employment growth of 0.5 percent in 2008, increasing to 1 percent in 2009, the forecast said. The unemployment rage will average 5.9 percent in 2008, improving to 5.6 percent in 2009.
In Los Angeles County, the local economy will see a modest 0.7 percent rise in nonfarm employment in 2008, or nearly 30,000 new jobs, and 1.2 percent - - around 51,000 jobs—in 2009, according to the forecast. The largest gains this year should come in health services, with 9,500 jobs; professional, scientific and technical services at 8,000 jobs; and leisure and hospitality services at 7,000.
Los Angeles County’s biggest job losses in 2008 will come in manufacturing at 5,000 jobs; information service—including motion picture and television production positions affected by the writers strike—at 3,000 jobs; and the construction industry at 2,500 jobs, the report said.
The real estate industry is forecast to lose 2,000 in Los Angeles County jobs this year, as will the finance and insurance sector, and many auto dealerships belonging to the Detroit Big Three are expected to close, reflecting slow vehicle sales, according to the forecast.
San Diego County should see nonfarm employment growth of 1.0 percent in 2008 and of 1.5 percent in 2009. The LAEDC Forecast noted that rebuilding from the late 2007 wildfires will provide somewhat a boost to economic activity. The county’s unemployment rate will average 4.9 percent in 2008 and 4.6 percent in 2009.
Orange County, suffering fallout from the subprime crisis, will record nonfarm employment growth of only 0.2 percent in 2008 and 0.8 percent in 2009. The county’s unemployment rate will average 5.0 percent in 2008, “which for it is extremely high,” the forecast said. In 2009, the rate will ease down to 4.8 percent.
The Riverside-San Bernardino area will see much slower growth because of a sharp slowdown in new home construction and a jump in home foreclosures, according to the forecast. Nonfarm employment growth is projected at 1.4 percent in 2008 and at 2.2 percent in 2009. The area’s unemployment rate is forecast at 6.2 percent in 2008 and at 5.8 percent in 2009.
And Ventura County could also be tiptoeing around a “spot” recession, with nonfarm employment growth of 0.3 percent in 2008 and 1.0 percent in 2009. The county’s unemployment rate is forecast placed at 5.5 percent in 2008 and at 5.2 percent in 2009.