California, L.A. Economy Show Moderate Growth
The state’s unemployment rate is coming down slowly, but it will remain above double digits until 2013 as the economy takes small steps toward recovery, according to a new economic report.
The Los Angeles County Economic Development Corp. on July 20 released its latest report, “2011–2012 Economic Forecast and Industry Outlook: Mid-Year Update,” which showed that certain industries—such as technology, international trade, tourism and entertainment—are in the midst of a real growth pattern. But residential housing construction and government spending are still a drag on the economic recovery.
“Local government financing and the real estate sector are two areas we are watching closely,” said Nancy Sidhu, chief economist for LAEDC's KyserCenter for Economic Research, and one of the report’s authors. “The state’s chronic budget crises continue to severely hamper local government funding and projects. Meanwhile, home values are down and vacancies in the nonresidential sector remain high.”
The apparel industry has made strides in the last year with apparel and textile employment in Los Angeles County up less than #8232;1 percent to 76,100 jobs. The report notes that apparel design in the region is strong, manufacturing is stable and distribution is expanding. There is a slight return to local production to offset rising prices in China and late-delivery problems. Also, specialty-store buyers are more interested in “Made in U.S.A.” labels than in the past because some consumers are turning away from Chinese-made goods.
On the retail front, taxable sales grew #8232;7 percent in 2010, following a 12.7 percent decline in 2009. Taxable retail sales are projected to grow by 7.7 percent in 2011 and 6.1 percent in 2012.
In Los Angeles County, the unemployment rate this year will decline only slightly. The county is expected to gain 28,000 jobs this year after losing 60,400 jobs last year. In 2012, the county should see an additional 65,000 jobs come on line.
The county’s unemployment rate averaged 12.6 percent in 2010. In 2011, the jobless rate is expected to edge down to #8232;12.2 percent and decline in 2012 to 11.5 percent. Business firms are being cautious about rehiring people until they see a long-term positive improvement in sales and profits.
International trade is one of the engines powering economic growth in Los Angeles County. Traffic at the area’s two ports in Long Beach, Calif., and Los Angeles saw a 20 percent surge in cargo volume last year. This year’s trade volumes aren’t expected to rise as dramatically, especially with Japan’s industrial output declining following a March 11 earthquake. But trade will be up this year and next, the report said.
Tourism is another thriving industry. About 25.7 million overnight visitors came to Los Angeles County in 2010. This year, about 26.3 million tourists should land in Los Angeles to tour the beaches, search for movie stars in Hollywood and attend conventions at the Los Angeles Convention Center.
In the construction arena, the value of nonresidential building permits given out by Los Angeles County slipped 3 percent in 2010, but they are expected to be up #8232;11.8 percent in 2011 and 10.3 percent in 2012. However, this is far from the boom years of 2004 to 2007.
In the home-building sector, about 10,600 units are expected to be permitted this year, and another 16,800 units will receive permits in 2012. Still, those numbers are woefully behind the mad housing boom of 2004 to 2007.—Deborah Belgum
