Job Loss in L.A. Pales in Comparison to Rest of State

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Job Loss in L.A. Pales in Comparison to Rest of State

By CONOR DOUGHERTY

Staff Reporter

Recession, what recession?

UCLA’s Anderson forecast last week concluded that while Los Angeles continues to experience lagging growth in several industries, including entertainment, the area has fared far better than the state as a whole and “is not really participating in the national recession.”

Between September and February, the number of people employed in L.A. County fell by .6 percent, to just over 4 million, according to the California Employment Development Department data. Statewide employment during the like period fell by 2.3 percent, to 14.8 million.

Meanwhile, the county’s jobless rate slipped to 6.4 percent in February from 6.8 percent the month before. While forecasters expect continued fluctuations in the next few months because unemployment is considered a lagging indicator, the numbers pale compared to the last recession, when unemployment peaked at 11.2 percent in July 1992.

“We’re experiencing an economic slowdown, but we’re not in a classic recession,” said Chris Thornberg, senior economist with UCLA’s Anderson Forecast. “The primary reason is we didn’t have exposure to the high tech industry, which was the core of this recession.”

Bolstering indications that the worst is over, even at the national level, was last week’s government revision of the fourth quarter gross domestic product, which showed that the U.S. economy was growing at an annual rate of 1.7 percent, up from an initial estimate of 0.2 percent. The upward numbers reflect an improved trade picture that has been influenced by resilient consumer spending.

Other data being assembled by UCLA economists and others would affirm earlier signals that L.A.’s diversified economy has served to offset contractions in specific industries, such as tourism and technology. This would be aerospace layoffs and other factors caused Los Angeles to feel the brunt of the downturn well into the 1990s.

But this being the economy, there are qualifiers about the most recent encouraging projections starting with the numbers themselves.

A report last week by the San Francisco Chronicle disclosed a serious job-loss undercount that could leave California with 180,000 fewer jobs in September, 2001 than the number reported by the EDD. The undercount, which was attributed to flawed sampling methods, had some economists quickly qualifying their conclusions about the last few months, although Thornberg says “I can’t see there being a substantial revision in the data.”

Woes for hotels, construction

Beyond the data’s reliability are concerns about several hard-hit sectors in Los Angeles including construction employment, which fell 6.5 percent between September and February, to 127,400 jobs. As lease rates for commercial real estate fell last year, developers pulled back from pursuing new projects, which is causing a slowdown in construction activity.

Also noteworthy during the period was a nearly 9 percent drop in hotel industry employment, which account for less than 1 percent of overall jobs, and a 5.7 percent decline in motion picture industry employment.

But even here, the losses appear to be contained. Hotels got hit because of lost business travel following Sept. 11. Hollywood is suffering from the effects of an advertising slowdown and last year’s production ramp-up in anticipation of strikes by the writers and actors guilds that never materialized.

Overall, L.A. appears to have weathered the storm. Of the six general categories tracked by the EDD manufacturing, transportation and utilities, trade, finance, services and government three saw less than a 1 percent decline in employment, two saw employment decline by less than 1.5 percent, and employment in one, government, increased by nearly 3 percent.

Among the surprises was the relative strength of the restaurant sector, widely expected to plummet along with hotels in the wake of Sept. 11. But restaurant employment was off by 1,000 jobs, or .4 percent, to 247,900 and the eateries hurt generally were limited to those reliant on tourist traffic.

State, local and private education jobs jumped considerably between September and February, mostly due to the new school year. There also was a minor loss of jobs between November and December, reflecting schools’ fine-tuning of staff levels once the year got started.

Even aerospace employment, which plummeted by half between 1991 to 2001, to 112,000 workers, has been relatively stable largely because the bulk of the losses occurred prior to 1995. With increased defense spending certain to take place in the post-Sept. 11 climate, there are prospects for modest growth.

Strength of recovery

“I’d say the region looks strong for the decade ahead,” said Stephen Levy, director of the Center for Continuing Study of the California Economy. “You have the third-largest port complex (in the world), where the largest trade growth is going to come in Asia and Mexico. You have the center of the entertainment industry, which will grow as disposable income increases in the nation and the world.”

Apparel and textiles, among the area’s largest employment sectors and one that was hit hard by the energy crunch last year, slipped in the September-February period by only .1 percent. Wholesale trade employment fell .3 percent to 263,300; transportation, which includes the bulk of the port jobs, dipped 1.7 percent, to 171,100.

“The strength of the region has re-emerged,” said Levy. “In the short-term Southern California has done better (than Northern California). It slowed less and will rebound more quickly simply because the leading cause of the downturn is the sharp drop in high tech sales.”

Thornberg and other economists, however, stress that the expansion, both locally and nationally, is likely to be restrained. The UCLA quarterly forecast, released last week, projects that GDP this year will grow by only 2-3 percent.

“In Los Angeles you’re going to see a return to job growth but it’s going to be a weak recovery because our biggest export market is the rest of California and the rest of the U.S.,” Thornberg said. “If they have a weak recovery, so will we.”

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