CALIFORNIA STATE UNIVERSITY LONG BEACH Southern California Regional Economic Forecast Lisa M. Grobar, Ph.D. Director, CSULB Economic Forecast Project Office of Economic Research
2009: A terrible year for job market 4% 2% 0% -2% -4% -6% -8% 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009
2009: Region Shares the Pain 2% 1% 0% -1% -2% -3% -4% -5% -6% -7% -8% Los Angeles Orange R/SB Ventura 2007 2008 2009
Quarterly Employment Growth Rates Percent 2 0-2 2007 2008 2009 2010-4 -6-8 -10 LA OC RSB V
Forecast Summary 2010 - Better, but not good 2011 - Positive job growth! 2012 - Healthy economic growth
Total Nonfarm Employment Growth 3% 2% 1% 0% -1% -2% -3% -4% -5% -6% -7% forecast 2004 2005 2006 2007 2008 2009 2010 2011 2012
The downturn began with housing-related sectors Since 2006, the region has lost 188,000 construction jobs and 82,000 jobs in financial services It will take more than a decade for these sectors to return to 2006 peak employment levels
Construction and Mining 10% 5% 0% -5% -10% -15% -20% Employment Growth forecast -25% 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Finance Employment Growth 8% 6% 4% 2% 0% -2% -4% -6% -8% forecast 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
In 2009 the downturn spread more broadly Cyclical sectors all see large downturn as national recession worsens Retail particularly hard-hit with the decline in consumer spending
Durable Manufacturing 4% 2% 0% -2% -4% -6% -8% -10% -12% -14% Employment Growth forecast 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Regional Taxable Sales Growth Percent 15 10 5 0-5 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012-10 -15-20
Retail Employment Growth 6% 4% 2% 0% -2% -4% -6% -8% -10% forecast 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Port of Long Beach: Loaded 370,000 Inbound Containers (TEUs) 320,000 270,000 220,000 170,000 120,000 2007 2008 2009 2010
Regional Transportation, 4% 3% 2% Warehousing & Utilities forecast 1% 0% -1% -2% 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012-3% -4%
Regional Professional & Business 6% 4% Services Employment Growth forecast 2% 0% -2% 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012-4% -6% -8% -10%
Areas of Growth for 2010 Health Services Information Federal Government
Health Services 5.0% 4.5% 4.0% 3.5% 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% Employment Growth forecast 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Federal Government Employment 4% 3% 2% 1% forecast 0% -1% -2% -3% 2004 2005 2006 2007 2008 2009 2010 2011 2012
Regional Economy Summary The region is starting to pull out of recession Annual job losses continue this year (but quarterly gains beginning in Q3) Conditions will improve significantly in 2011, with positive job growth A return to healthy job formation in 2012
Economic Outlook Los Angeles County
Total Nonfarm Employment 3% 2% 1% 0% -1% -2% -3% -4% -5% -6% -7% Los Angeles County 2002 2003 2004 2005 2006 2007 2008 2009
Retail Employment Growth 4% 2% forecast 0% -2% -4% -6% -8% 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
California Film Incentives Last year CA allocated $500 million in tax credits through 2014 As of January the program used up the first 2 years of funding Employment in LA County motion pictures up 10,000 from year-ago But program is out of money until next fiscal year
Information Employment Growth 8% 6% 4% 2% 0% -2% -4% -6% -8% -10% forecast 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Los Angeles County 3% 2% 1% 0% -1% -2% -3% -4% -5% -6% -7% Total Nonfarm Employment Growth forecast 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Economic Outlook Orange County
Orange County Professional and Business services will lead Orange County out of the recession We expect Orange County to be the bestperforming economy in the region in 2011-2012
Orange County 4% 2% Total Nonfarm Employment Growth forecast 0% -2% -4% -6% -8% 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Economic Outlook Riverside/San Bernardino
Riverside/San Bernardino This area hit very hard by sub-prime crisis As a result, the housing market will take longer to recover and will continue to be a drag on the economy through 2011.
Riverside/San Bernardino 8% 6% 4% 2% 0% -2% -4% -6% -8% -10% Total Nonfarm Employment Growth forecast 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Economic Outlook Ventura County
Ventura County 3% 2% 1% 0% -1% -2% -3% -4% -5% -6% Total Nonfarm Employment Growth forecast 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
The Housing Market
The Regional Housing Market Coastal areas bottomed out in 2009 Median price up, but mostly reflecting more higher-priced homes in the mix Our view: it looks like the beginning of a recovery for the coastal areas But 2010 could see a bumpy ride as federal tax credits expire in April
Los Angeles County Median Price
Orange County Median Price
Proportion of Foreclosures in 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Housing Transfers 1994 1996 1998 2000 2002 2004 2006 2008 LA Orange Riverside
Los Angeles County Housing Affordability Index % of Households that can buy 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% 2003 2006 2009 Source: CA Association of Realtors
Orange County Housing Affordability Index % of Households that can buy 40% 35% 30% 25% 20% 15% 10% 5% 0% 2003 2006 2009 Source: CA Association of Realtors
Housing Market in Near Term Credit is slowly easing The mix of homes is starting to shift back toward higher-priced homes, causing median price to rise True appreciation has been much smaller Once recovery gets underway, median price increases will reflect true appreciation
Los Angeles County Forecast of Housing Appreciation [year-to-year percentage change in median price] 30% 20% 10% 0% -10% -20% -30% -40% 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12
Orange County Forecast of Housing Appreciation [year-to-year percentage change in median price] 30% 20% 10% 0% -10% -20% -30% 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12
Summary 2009 was the trough of this housing cycle Median home prices rise in Los Angeles and Orange County in 2010 Sustained appreciation through 2012