EMBARGOED FOR RELEASE

WEDNESDAY, July 12, 2006 12:01 A.M. (PST)

A Quiet Boom in Southern California: Economy remains steady with solid performance in 2006 despite the leveling off in the housing market

LOS ANGELES – Southern California’s economy will turn in a solid performance in 2006, despite the leveling off in the housing market. Growth in 2007 will be slightly slower, reflecting higher interest rates and energy costs, according to the Los Angeles County Economic Development Corporation’s “Mid-year Update: 2006-2007 Economic Forecast & Industry Outlook for Southern California.” The July 12^th Economic Forecast will be moderated by Paul Magers, one of the lead anchors for CBS 2 News.

“While the public has been grumpy about the performance of the economy, 2006 will be a very decent year for Southern California,” said Jack Kyser, the Corporation’s Chief Economist. “Call it the ‘quiet boom.’ We will see record levels of activity in international trade and in tourism. In the meantime, there is a large array of major developments underway around the 6-county region ranging from transportation projects to hospitals. And folks in Hollywood are breathing a little easier due to the upturn in both domestic and international box office receipts.”

The LAEDC Economic Forecast noted that both the new and resale housing markets in Southern California have simmered down, with unit sales declining over the year and price increases in the resale segment dropping from double to single digits. “There are some areas where there are problems, such as downtown San Diego and Riverside County,” added Kyser. “There has been a rush to develop high-rise condos and ‘live/work’ units, with the question being how deep are these markets?”

The LAEDC Forecast highlighted six industries with positive outlooks over the next 12 months, including:

§ Commercial aerospace

§ Business and professional management services

§ Bio-medical

§ International trade (a record level of 15.6 million containers will be handled at the local ports)

§ Technology

§ Tourism and travel (a record 25.7 million overnight visitors in Los Angeles)

Kyser did sound a note of caution about international trade (due to a program to improve security at the ports which could cause shortfalls in workers), and the hotel industry where labor negotiations will be underway.

The LAEDC Forecast also noted that manufacturing employment in Southern California (the largest manufacturing center in the nation) seemed to be stabilizing. Most people use employment as the benchmark of this sector’s health, and it is not the best measure as this sector has made a major effort to improve productivity. “Currently, there is a push to convert industrial sites to residential or mixed-use, with the justification that manufacturing is going away. What some people seem to be saying is that let’s get rid of these good-paying jobs (an average salary of $47,200) and build pricey housing,” observed Kyser.

In the region’s signature entertainment industry, there has been a sigh of relief due to the upturn in both domestic and international box office receipts. “Los Angeles County should see a gain of 2,000 jobs in 2006, while the state should hold even. Run-away production is hurting all areas of the state,” noted Kyser.

Setting the pace in employment growth in 2006 will be the Riverside-San Bernardino area with an increase of 2.9% or 34,700 jobs. Ventura County should see a 1.8% gain or 5,300 jobs. Right behind will be San Diego County, up by 1.7% or by 21,900 jobs. Orange County projects employment growth of 1.4% or 20,300 jobs in 2006. Los Angeles County is forecast to see a 1.3% increase or 52,800 jobs.

A feature of the LAEDC’s Mid-year Forecast is analysis of economic performance by area in Los Angeles and Orange counties and in the Riverside-San Bernardino area. “The performance of the areas in Orange County and the Riverside-San Bernardino area is favorable, although there are growing congestion and land use issues,” said Kyser. “However, in Los Angeles County there are areas that clearly have significant challenges. The most obvious is South Los Angeles, due to a string of job losses and nothing in sight to turn this trend around.” Kyser also noted that North Gateway (southeast L.A. County) and the East San Fernando Valley have their own growth challenges. The former is dealing with job losses in manufacturing while the latter has one of the largest concentrations of motion picture employment where run-way production and union labor negotiations are on people’s minds.

While the overall outlook for the region for the remainder of 2006 and into 2007 is positive, there are some important things to monitor:

§ The state infrastructure bonds on the November ballot.

§ Land availability and use is a growing issue, as witnessed by fights over conversion of industrial land to other uses.

“For our economy to continue to grow, we will have to make the investment in our regional infrastructure, particularly our trade infrastructure that we have depended on for too long. We see the state transportation bond on the November ballot as a huge opportunity to create good jobs, relieve traffic congestion, improve public safety and improve our air quality right here in LA County,” said Bill Allen, LAEDC’s president and CEO.

About LAEDC

The Los Angeles County Economic Development Corporation (LAEDC), the region’s premier business leadership organization, is a private, non-profit organization established in 1981. Our mission is to attract, retain, and grow business and jobs in Los Angeles County. Since 1996, the LAEDC has helped retain or create more than 117,497 jobs, providing $5.4 billion in annual economic impact from salaries and $105 million in annual tax revenue benefit to Los Angeles County (as of 6/30/06). For more information, please visit www.laedc.org.

About Paul Magers

Paul Magers, one of the most highly regarded news anchors in the country, joined the CBS 2 News team on January 5, 2004. Magers and Laura Diaz anchor the station’s weekday 5 and 11 p.m. newscasts. Paul and Laura are also the hosts of the station’s news series “Studio 2,” which airs Sundays at 6:30 p.m. He is the recipient of numerous industry awards, including several Emmys and a Golden Mike. Magers began his broadcasting career at KSTP-TV in St. Paul, then moved in 1979 to KATU-TV in Portland, where he began working as an on-air reporter. In 1981, he moved down the West Coast to KGTV-TV in San Diego, where he spent two years as a reporter and anchor before he returned to the Twin Cities and began his 20-year career with KARE.

[Editors: The Forecast will be presented at the Marriot Hotel, Grand Ball room, Downtown Los Angeles, 333 S. Figuerora, LA, CA 90071, 8:00 A.M. - 10:00 A.M. .For advanced interviews call: George McQuade @ 818-340-5300 or 818-618-9229.

The full report is available on the internet at:
http://www.laedc.org/reports/Forecast-2006-07.pdf. For more information about LAEDC, contact Nhien Barros 213-236-4816 or visit: www.laedc.org.

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