L.A. County Economy Will Continue Struggling Through 2010

The U.S. economy could be nearing its bottom this summer, but economists predict unemployment rates could continue to rise in California and Los Angeles County well into 2010. California’s jobless rate, which was 11.6 percent in June, will average 12.6 percent next year according to Jack Kyser, founding economist of the Kyser Center for Economic Research at the Los Angeles County Economic Development Corp. In Los Angeles County, continued hardship in key industry sectors such as construction, manufacturing, retailing and leisure and hospitality services will result in the loss of 168,000 jobs in 2009. In 2010, total nonfarm employment in the County could decline by two percent or 78,700 jobs, according to projections made in an LAEDC Mid Year report released on June 22. The report predicts the County’s unemployment rate will average 12.8 percent by 2010, jumping from the high point of 10.9 percent in July. In 2009, total personal income will decline by 1.6 percent before rising slightly in 2010. New construction in L.A. County will also show a dramatic decrease. In 2009, only 6,465 new units will get started, a 75 percent decline from the 2006 peak of 26,348 units. The county will also have to deal with its oversupply of apartments and condos, and the value of nonresidential building permits issued is expected to fall by 45 percent during 2009 to $2.47 billion. Other sectors of the Southern California economy have also been adversely impacted. The motion picture/TV production industry has experienced a decline in permitted location production days to a low of 7,043 production days recorded in 2008, from 13,284 days in 1997. The industry will continue to struggle with runaway production and cost containment concerns. According to Kyser, other key economic drivers are in danger of shrinking. “While the full impact would probably not be felt until 2011, the biggest single risk for the county is the Defense Department’s potential stoppage of Boeing’s C-17 program,” the report said. Some 5,000 employees assemble or support this plane in Long Beach and they, in turn, are supported by thousands more workers among the county’s subcontractor base. Once a key regional driver, the textile manufacturing industry will shrink 14 percent between 2008 and 2010, shedding 13,000 jobs, the report said. Overall, the Mid Year Economic Forecast & Industry Outlook projects the U.S. economy will shrink by 2.7 percent during 2009 and then grow modestly by 1.7 percent in 2010. “We think the economy is nearing bottom this summer, so the current economic news looks terrible,” said LAEDC Chief Economist Nancy D. Sidhu. “The recession officially began in December 2007 and looks like it will be the deepest downturn since the recession of 1981-1982.” The study projects a loss of 5.4 million jobs in the U.S. during 2009. Unemployment will reach 10.4 percent in 2010- the highest since 1982. Andrea Alegria