Presentation Transcript
Slide1: CALIFORNIA STATE UNIVERSITY LONG BEACH Southern California Regional
Economic Forecast Lisa M. Grobar, Ph. D.
Director, CSULB Economic
Forecast Project
Slide2: National Outlook 2003 2004 2005
GDP Growth 3.0% 4.4% 3.2%
Inflation 2.3% 2.7% 2.2%
Unemployment 6.0% 5.5% 5.4%
Federal Funds Rate 1.1% 1.3% 2.6%
Forecast for 2004-2005: Forecast for 2004-2005 GDP growth in 2004 best year since 1999
Next year, economy slows in response to high oil prices and Fed tightening
A weaker dollar and an improving world economy will boost exports and is welcomed news to manufacturers
Healthy job formation in 2004 & 2005 but the unemployment rate will be slow in coming down
The Region’s Economy Is Showing Some Improvement: The Region’s Economy Is Showing Some Improvement
Total Nonfarm Employment Growth Region and the Nation: Total Nonfarm Employment Growth Region and the Nation
Factors Influencing the Region 2005-2007: Factors Influencing the Region 2005-2007 Long anticipated recovery in national employment growth
Manufacturing drag eases substantially
Changes in macroeconomic “fundamentals”
Exchange rate
Interest rates
Budgetary problems in Sacramento
Regional Durable Manufacturing Employment Growth: Regional Durable Manufacturing Employment Growth forecast
Regional Leisure & Hospitality Employment Growth: Regional Leisure & Hospitality Employment Growth forecast
Regional Construction Employment Growth: Regional Construction Employment Growth forecast
Regional Health Services Employment Growth: Regional Health Services Employment Growth forecast
Regional State & Local Gov’t Employment Growth: Regional State & Local Gov’t Employment Growth forecast
Regional Total Nonfarm Employment Growth: Regional Total Nonfarm Employment Growth forecast
Regional Taxable Sales: Regional Taxable Sales forecast
Economic Outlook Los Angeles County: Economic Outlook Los Angeles County
Los Angeles County Economy: Los Angeles County Economy Los Angeles County is “most improved” county this year.
Manufacturing losses are beginning to decelerate, particularly in durables
Aerospace manufacturing is adding jobs!
Business Services are growing
Double-digit growth in employment services
Los Angeles County Job Losses in Durable Manufacturing: Los Angeles County Job Losses in Durable Manufacturing
Los Angeles County 2004 Aerospace Manufacturing Employment: Los Angeles County 2004 Aerospace Manufacturing Employment
Los Angeles County: Durable Manufacturing Employment Growth: Los Angeles County: Durable Manufacturing Employment Growth forecast
Los Angeles County Health and Business Services: Los Angeles County Health and Business Services forecast percent
Los Angeles Hotel Occupancy Rates: Los Angeles Hotel Occupancy Rates PKF Consulting
Los Angeles County Leisure and Hospitality: Los Angeles County Leisure and Hospitality forecast
Los Angeles County: Los Angeles County Other bright spots include construction, finance and real estate, transportation
Some growth in retail trade employment
Weak spots: information (motion pictures), state & local government
Motion Picture Industry Production Days in Los Angeles: Motion Picture Industry Production Days in Los Angeles Source: Entertainment Industry Development Corp.
Los Angeles County Total Nonfarm Employment Growth: Los Angeles County Total Nonfarm Employment Growth forecast
Economic Outlook Ventura and Imperial Counties: Economic Outlook Ventura and Imperial Counties
Ventura County Construction Employment Growth: Ventura County Construction Employment Growth percent
Ventura County: Ventura County Sources of strength: professional & business services, education & health services, trade, and real estate
Weakness similar to region – state & local government, information, little growth in manufacturing
Ventura County Total Nonfarm Employment Growth: Ventura County Total Nonfarm Employment Growth forecast
Imperial County: Imperial County
Imperial County Employment: Imperial County Employment
Imperial County Employment (thousands of jobs): Imperial County Employment (thousands of jobs)
Imperial County State & Local Gov’t Employment: Imperial County State & Local Gov’t Employment forecast
Imperial County Total Nonfarm Employment: Imperial County Total Nonfarm Employment forecast
A Note on Housing: A Note on Housing Affordability in the region is now at record-low levels, while appreciation rates remain well into the double-digits.
Will higher interest rates bring about a “soft landing” in region’s housing market?
The last two cycles ended with a significant shock [year-to-year percentage change in median price] : The last two cycles ended with a significant shock [year-to-year percentage change in median price] 1982: mortgage rates
reach 17.4% 1990-93: region loses
half million jobs
Summary: Summary The regional economy continues to improve, but growth will still be below-average this year.
We expect to see a significant acceleration in employment growth in 2005, mirroring national trends.
Performance of sectors will change as macro fundamentals change – higher interest rates will slow housing market – but by how much?