L.A.'s economy is not as anemic as it appears on the surface, nor is the outlook for the rest of the year as gloomy, according to a mid-year forecast due out this week from the Los Angeles Economic Development Corp.

While the forecast is in line with others in projecting a modest payroll job growth rate of 1 percent, that figure masks a more robust jobs picture, according to LAEDC chief economist Jack Kyser.

That's because the local economy is generating tens of thousands of jobs for people not on payrolls, like independent contractors and freelancers working in the entertainment, technology and trucking industries.

"L.A.'s economy has evolved and there's now a growing percentage of workers who escape detection in traditional job surveys," Kyser said. "It's making a real difference now, because it means the jobs picture is brighter than the traditional numbers seem to indicate."

To back this up, Kyser cites a different jobs figure: the number of people in L.A. County's civilian labor pool who are employed. Unlike payroll jobs figures, which are compiled from payroll tax data submitted by companies, the civilian labor pool figures come from surveys of residents. It picks up those residents who are self-employed or who work in freelance or independent contractor arrangements.

According to this data, civilian employment in L.A. County stands at 4.62 million, eclipsing the previous high in March 2001 of 4.53 million. And the jobs being missed by traditional measures are growing more rapidly than payroll jobs. From May 2004 to May 2005, there was a jump of 159,000 or 3.5 percent in employment, compared with a 23,000 or 0.5 percent increase in the nonfarm payroll jobs.

Kyser said he expects the employment increases to continue during the second half of 2005 and well into 2006.

In fact, Kyser said that several of LAEDC's regional managers are reporting increased anecdotes of "job-hopping," where a person gets a job, holds it for two or three months and then finds another, higher-wage job.

"Several sectors of the local economy are picking up steam: international trade/logistics, aerospace, professional and business services and tourism," he said.
But like other economists, Kyser warned of several risks that could slow job growth. The most immediate threat, he said, is summertime cargo congestion at the ports. Delays in moving goods could affect both the logistics industries and the retail sector that rely heavily on making sure the goods are on store shelves.

Last week, terminal operators announced extended gate hours at the ports in an attempt to avoid a repeat of last summer's costly tie-up, when dozens of ships waited weeks to unload their cargo.

Meanwhile, anemic box-office receipts could spill over into the motion picture production industry, slowing job growth there. So far, though, Kyser said the sector remains strong.

He expects some cooling of the housing market, but not enough this year to have an impact on construction industry employment. The slowdown could become more pronounced next year. "People are already getting nervous about buying at the top of the market," he said.

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