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Wednesday, Feb 28, 2024

Forecast Sees Modest Growth in County’s Economy

Los Angeles County’s economy will continue on its modest growth path this year, according to the Los Angeles County Economic Development Corp.’s forecast released Feb. 18.

The county is expected to add roughly 48,400 payroll jobs this year on a base of about 4.65 million, according to the forecast. That’s on par with the 49,700 jobs the forecast says the county added during 2019. (The state Employment Development Department reported in January that the county added 68,000 payroll jobs in 2019; the LAEDC uses a different averaging technique for its figures.)

The LAEDC projects the county’s unemployment rate will dip to an average of 4.3% for 2020 from an average of 4.5% in 2019.

The forecast projects real gross domestic product growth for 2020 of 1.8%, up slightly from 1.6% in 2019. The county’s gross domestic product is currently estimated at around $861 billion, according to the forecast.

“There is enough momentum in the economy to maintain moderate growth in 2020, as there was in 2019,” Tyler Laferriere, associate economist at the LAEDC, said in an email. “However, there are … headwinds in the local economy to prevent a significant increase in growth, such as housing prices and population decline.”

Laferriere said the coronavirus will impact the trade, logistics, tourism and hospitality sectors this year, though he said it’s too early to project the extent of the impact on the local economy.

One indicator that is forecast to slow significantly is real personal income growth. The LAEDC’s 2020 forecast calls for 1.8% growth, down from 2.8% for 2019.

The forecast attributes this drop to a hidden unemployment rate, known as the U-6 rate, which includes “marginally attached” and part-time workers seeking full-time employment. The U-6 rate is just over 10%, more than twice the official unemployment rate of 4.5%.

“This figure has remained stubbornly high despite broadly improving economic conditions,” the forecast states. “This is an important risk to the regional economy since … the greater looseness in the Los Angeles County labor market means that wages are not going to rise as rapidly as they might otherwise.” Wages are the principal component of personal income growth.

The forecast also projects the number of housing permits to be issued in L.A. County will remain constant at about 21,000 for this year and next year; that figure has barely budged since 2016.

To meet the regional housing needs assessment issued by the Southern California Association of Governments, the county would have to triple the number of permits issued for both this year and next year. “This is likely an impossibility under current regulatory and cost restrictions,” the report states.

The LAEDC forecast included some good news for homeowners, projecting that the median home value will rise to $658,000 this year from $646,000 last year.

Healthcare/biomed, energy, engineering/construction and infrastructure reporter Howard Fine can be reached at hfine@labusinessjournal.com. Follow him on Twitter @howardafine.

Howard Fine
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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