LAEDC Report: Recovery Delayed
The U.S. economic recovery will slow during the first part of 2003 but will accelerate later in the year and throughout 2004, according to an updated forecast released by the Los Angeles County Economic Development Corp.
According to the LAEDC’s 2003–2004 economic report, the state will generate about 94,000 nonfarm jobs in 2003, a 64 percent reduction from the agency’s estimates in September.
The report stated that pre-war jitters combined with poor investment spending and a lackluster retail environment will result in slower growth in the first half of 2003, impacting retail stores, local governments and mainline airlines. The state’s unemployment rate in 2003 will climb to 6.5 percent. In 2004, the state will add 250,500 jobs, and the unemployment rate will dip down to 6.1 percent, according to the report.
Chief economist Jack Kyser said the LAEDC cut its employment estimates for every region in the state, particularly for the Bay Area, after California’s economy slowed down in the fourth quarter of 2002.
The LAEDC predicts the Bay Area will shed 49,500 jobs within three metro areas: San Francisco, Oakland and San Jose.
“The Bay Area is still fighting the downturn in the tech sector, sluggish trends in tourism and a real-estate bubble—all of which may take more than one year to recover,” said Kyser.
The LAEDC predicts the strongest growth in nonfarm employment will be in the Riverside– San Bernardino area, with an increase of 3.0 percent to 32,100 jobs. Orange County will post a 1.4 percent gain of 19,400 jobs, followed by Los Angeles County at a 1.0 percent increase of 39,500 jobs and Ventura County at a 0.9 percent increase of 2,600 jobs. San Diego County is expected to increase employment by 2.1 percent, or 26,400 jobs.
The report, however, said many companies are likely to restructure and streamline their operations, which may result in significant layoffs.
Kyser said labor costs will decelerate this year, reducing the prices of many services. Goods prices will edge down again because of intense competition between retailers and the Internet.
Apparel-wise, the state’s manufacturers will have a tough beginning, but business will get easier further down the road, said Kyser.
“The consumer is going to have to be persuaded,” he said. “The retail industry has another uncertainty over their head, and that is finding ways to introduce newness. There are consumers out there, but apparel makers should still be cautious.” —Claudia Figueroa
