Wednesday,
July 18, 2007
Southland Economy Looks Good For Overall Growth, But Spotty Performance by
Area and by Industry LAEDC Forecast Says
Housing
will remain a drag through early 2009, while
face uncertainty because of labor contracts – will there be a strike?
Los Angeles—Southern
California’s economy will turn in a “decent” performance in 2007, a gain of
1.4 percent or 98,100 new nonfarm jobs, despite the drag from the housing
sector, according to the Los Angeles
County Economic Development Corporation (LAEDC)’s “2007
Mid-Year Economic Forecast”.
“However,
housing won’t be the only thing to worry about,” said Chief Economist Jack
Kyser for the LAEDC. “The film industry
has a string of critical labor contracts to negotiate.
In addition, international trade is facing environmental challenges,
but in 2008 will also bring a labor contract of its own to negotiate although
the two parties have agreed to start negotiations early.”
Highlights of the LAEDC Forecast:
- Among the five local metropolitan areas, the
Riverside-San Bernardino area will be the leader as measured by job growth
in 2007 and 2008. However, this area
is being restrained by the housing slowdown.
“Laggards” include
- 2007 will mark an important milestone for Los
Angeles County, as nonfarm employment (an average of 4,142,600 jobs) will
finally surpass the previous high attained way back in 1990 (an average of
4,135,700 jobs).
- Local industries with the best growth prospects
over the next two years include professional, scientific and technical services
(which include accounting, law, engineering, computer software design, and
scientific R & D), health services, and leisure & hospitality services.
International trade will also provide
support, with an increase of 6.3 percent to 16.75 million containers handled
in 2007.
- “Laggard” industries in the region will include
residential construction, durable goods manufacturing, and finance and insurance
in 2007.
-
The LAEDC Mid-year Forecast also checks the health of smaller areas within
the five local metropolitan areas. In
“A
frequently asked question is when the housing industry will turn around,”
said Kyser. “We are a tad bearish, forecasting a distressing
33.7 percent decline in the number of new housing permits in the 5-county
area in 2007 and a 6.8 percent slide in 2008. This comes on the heels of declines in 2005
and 2006. Housing weakness will remain
in evidence through late 2008, and the recovery will be restrained. Don’t look for a return to double digit gains
in prices.”
Another
key local industry facing rough going is the motion picture/TV production
industry, with the Writers Guild contract expiring in October 2007, and the
Screen Actors and Directors guild contracts up for renewal in June 2008. “The dialogue between the two parties has been
rather harsh,” observed Kyser. “There
is a high potential for a disruption in this industry, either a strike or
a “de facto” strike. Stockpiling of
filmed product is already underway.”
Support
for the
The
LAEDC Forecast looks for moderate growth in the
“While
the forecast is for continued growth in the
However,
the Forecast finds that government agencies will face slower growth in tax
revenues, as well as calls for increased investment in infrastructure.
All government agencies will need a healthy and growing economy to
generate the required tax revenue, yet little thought is generally given to
economic development, and providing a better climate for industries to grow.
About the LAEDC
The
LAEDC, the region’s premier business leadership organization, is a private,
non-profit organization established in 1981 under section 501(C) (3).
Our mission is to attract, retain, and grow business and jobs for the
regions of
[Editors: Please
call for an advanced copy of the embargoed study or link and to do advanced
interviews with LAEDC Chief Economist
-30-