L.A.'s economy should continue to see solid growth despite the slowdown in housing as other sectors take up the slack, according to a mid-year economic forecast released Wednesday by the Los Angeles County Economic Development Corp.
The county should add about 53,000 jobs in 2006, for a growth rate of 1.3 percent, the forecast said. That should be followed by a 48,000 job gain in 2007, a growth rate of 1.2 percent. These levels represent the most robust job growth in L.A. County since the year 2000.
"While the public has been grumpy about the performance of the economy, 2006 will be a very decent year for Southern California," said Jack Kyser, chief economist for the LAEDC. "It's a quiet boom."
The "boom" is being led by employment gains in the hospitality sector, construction, international trade and business, as well as professional and technical services. The hospitality sector is benefiting from an expected a record 25.7 million overnight visitors this year on top of the record 24 million last year.
The job growth in the construction sector stems from several billion dollars in major public sector and commercial projects, more than offsetting the slowdown on the residential side.
Among the $30 billion in projects at various stages: upgrades to infrastructure at the Ports of Long Beach and Los Angeles, construction of the $900 million Eastside rail line through Boyle Heights and the $640 million Exposition light rail line to the Westside are the most notable. There are also billions of dollars forecast for hospital retrofit and replacement projects, dozens of new and upgraded school campuses and substantial loft and condominium construction in Downtown Los Angeles.
The forecast did point to some cautionary notes. Trade at the booming ports could be slowed as a new program requiring all dockworkers to show detailed identification takes effect this fall. Continued labor strife in the hotel industry could crimp tourism, while even the threat of a strike in the motion picture and television production sector could once again prompt studios to switch production schedules as they did two years ago.
Also, while the LAEDC forecast and most other economists continue to predict a "soft landing" for the housing sector, there's still an outside chance for substantial home price drops in certain submarkets. That could put an abrupt end to the "wealth effect" perception among homeowners and prompt them to rein in spending.
And, of course, there are the national concerns about rising interest rates and their impact on consumer spending, and the impact of what now appear to be sustained high gas prices.
Nonetheless, the LAEDC forecast remains bullish on the L.A. economy. "There are enough sectors of this economy performing very strongly that they should offset a leveling off in the construction market and these other risks," Kyser said.
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