Economy Still Strong, But Problems Lurk

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L.A.’s economy will continue to see moderate growth for the rest of this year and into next year, though several trouble spots loom that could derail the momentum, according to a mid-year update forecast to be released Wednesday morning from the Los Angeles County Economic Development Corp.


The county is on track to add about 50,000 jobs a growth rate of 1.2 percent for all of 2007, according to the forecast. With these additional jobs, L.A. County should finally surpass the record employment levels reached way back in 1990, just before a deep recession decimated the local job market.


“It’s been a long road back for L.A. since 1990, and it’s quite an achievement,” said Jack Kyser, chief economist with the Los Angeles County Economic Development Corp.


However, the pace of job growth is slowing from 2006, when 68,000 jobs were added for a growth rate of 1.7 percent. That was the best year since 2000. The report said the slumping housing market is acting as a drag on overall job creation.


Despite this, the unemployment rate for 2007 is still expected to hover near its record low of 4.7 percent. And total personal income growth will still be a fairly robust 5.7 percent.


But, the forecast warned, “there are potholes aplenty” that could shift these numbers down, including the slowdown in the housing market and related fallout from the subprime lending crisis, which could hit areas like the Antelope Valley and lower income communities hard.


There’s also the threat of strikes at the Ports of Los Angeles and Long Beach and by the Writers Guild and other labor unions within the entertainment industry. And the fallout from the ongoing crisis at the King-Harbor Medical Center could affect the health sector. If the center were to close or sharply scale back, it could strain other hospitals nearly to the breaking point.


For now, these potential trouble spots are being offset by strong performance in the commercial aerospace sector, business and professional management services, bio-medicine, technology and tourism, which all received grades in the “A” range on the Economic Development Corp.’s semiannual industry report card.


At the other end of the report card is health services, which received a “D,” followed by motion picture and television production at “C” and apparel manufacturing at “C+.”


Within Los Angeles County, the East San Fernando Valley, the Antelope Valley and the mid-Wilshire/Hollywood areas are expected to record stronger than average job growth this year (at or above 4 percent), while South Los Angeles will be flat, the report said.

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Howard Fine
Howard Fine is a 23-year veteran of the Los Angeles Business Journal. He covers stories pertaining to healthcare, biomedicine, energy, engineering, construction, and infrastructure. He has won several awards, including Best Body of Work for a single reporter from the Alliance of Area Business Publishers and Distinguished Journalist of the Year from the Society of Professional Journalists.

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