Los Angeles/Orange County:

Experts Prepare for Recession But Expect Solid Growth Into 2021

As the economy continues slowing in Los Angeles and Orange counties, so will job growth and other trends that played into the region’s steady growth over the past few years. However, local business leaders are preparing for a recession while simultaneously planning for the current historically long expansion to possibly last well into 2021.

That’s according to the most recent forecasts presented and published by the Los Angeles County Economic Development Corp., Chamber Business Alliance of North Orange County, and Beacon Economics. The keynote speakers’ opinions spotlight intriguing viewpoints, trends and projections so your credit union can plan appropriately.

Los Angeles and Orange Counties
Presented on Feb. 19 by experts from the Los Angeles County Economic Development Corp. during the “2020 Economic Forecast” event:

Economic growth over the next two years in Los Angeles and Orange counties will fall slightly behind the entire state and nation. But growth still come within a range of 1.6 – 2 percent annually in 2020 and 2021 depending on the county (local GDP — Growth Domestic Product). Real personal income growth (after inflation is factored in) will rise 1.8 – 2.6 percent per year, and total new jobs created will increase 16,000 – 48,000 annually depending on the county and the year (with an approximate 2.6 percent unemployment rate in Orange County and 4.1 percent in Los Angeles County by mid-2021).

As annual job growth continues slowing down in Los Angeles and Orange counties, more potential workers are still being drawn into the labor force (adults willing and able to work). But not all industries will add new jobs. Some sectors in both counties will lose jobs. There are a few industry sectors in Los Angeles County that will actually suffer net-negative job losses: manufacturing in 2020 and 2021, “other” services in 2020, and financial services in 2021. The same goes for Orange County: manufacturing in 2020, transportation/trade/utilities in 2020, financial services in 2020, “other” services in 2021, and the government sector in 2020 and 2021. These job losses are low and concentrated compared to the much larger positive job gains in all other industry sectors over the same period.

The median price of a single-family home in Los Angeles and Orange counties will continue rising (although much slower), within a range of 1.8 – 2.6 percent annually in 2020 and 2021 depending on the county. Home-price growth will still happen but at a much slower pace than the past few years (2015 – 2018). In Los Angeles County, this value will hit $674,000 by late 2021 (compared to $646,000 in late 2019). In Orange County, it will hit $764,000 by late 2021 (compared to $726,000 in late 2019). Building permits for new homes will average about 21,300 annually for those two years in Los Angeles County, while in Orange County they will average 7,800 annually (much lower individual yearly numbers than during the 2015 – 2017 period).

Employment and real per-capita income growth in Los Angeles and Orange counties are forecast to continue through 2021, but with a cautionary warning. “Housing costs and population loss, which started in 2018, must be addressed to ensure future economic vitality,” the forecast report states. “Stronger productivity gains in manufacturing compared to services implies technology and automation as potential motivators for growth. Strong county-level emphasis on workforce preparedness will serve to mitigate labor force displacement.”

You can view more trends, analysis, projections, and insights into the current opportunities and challenges facing Los Angeles and Orange counties. Click here to view the entire report.

Greater Northern Orange County
Presented on Feb. 13 by Beacon Economics during the “North Orange County Economic Forecast 2020” event, hosted by the Chamber Business Alliance, PacWest Association of Realtors, and the chambers of commerce for Brea, Yorba Linda, and Corona:

View the slideshow presentation from the conference. It shows trends in the labor market, housing market, employment/jobs, education, business activity, and other local/regional and state data points for the greater Northeast Orange County vicinity, all of Orange County, and other parts of Southern California and the entire state: Click here for the entire presentation.

Multifamily Housing in Southern California
The "Demystifying the High Cost of Multifamily Housing Construction in Southern California" report, recently published by UC Riverside's Center for Economic Forecasting and Development, explores the "why" behind the "housing crisis" that plagues the Los Angeles area and many other parts of California.

Allen Matkins/UCLA Anderson Forecast
View the latest Allen Matkins/UCLA Anderson Forecast Commercial Real Estate Survey for trends and projections across all local California commercial real estate markets (office, industrial, retail, and multi-family apartments).

Local Home Affordability Vs. Job Growth
The National Association of Realtors recently released a study (“Home Affordability Index Ranking and Payroll Job Growth") showing trends in how local housing affordability can contribute to slower local job growth by employers. View the data table for local metropolitan information in California.

Local Migration and Population Change’s Impact
Within one of Harvard University Joint Center for Housing Studies' latest research endeavors — "Losing Residents but Still Growing” — you can understand how the components of population change differ by county, as well as exactly how each community is evolving and where people are drawn to when they move. As the county-by-county map shows, many large central metro counties are attracting numerous international migrants, while many nearby suburban areas (referred to as “large fringe metros”) are attracting sizable numbers of domestic migrants. Counties in many high-cost metropolitan areas are losing more domestic migrants than they are gaining. Indeed, of the 100 most populous US metros, four of the five with the highest rates of renter cost burdens also have negative domestic migration.

Local County-Level Perspectives
The California Department of Transportation (Caltrans) has released its updated 2019 – 2050 demographic forecast for all counties in California regarding local jobs, wages, home prices, population, personal income, taxable sales, net migration, wildfire issues, public policy implications, legal cannabis, industries, workforce, and more. For forecasting purposes, the shorter-term economic projections for 2019 – 2024 within this annual county-wide report by Caltrans do not factor in an economic recession into its local scenarios. They are only highlights stemming from a baseline projection (view the report above for more information).

Los Angeles/Orange County Occupational/Industry Trends
Additionally, download Chmura Economics and Analytics’ latest Southern California Economic Overview to see 10-year future trends in worker occupations, employment, wages, cost of living, and industries.

Your Local Region’s GDP: 2001 - 2018
The U.S. Bureau of Economic Analysis has released an overview and history on "Local Area Gross Domestic Product from 2001 - 2018" for individual counties in California and the entire nation. It includes highlights and trend breakdowns for large, medium and small-population size counties, as well as the U.S. dollar size of economies for each county. Tables and files are included for download and review.

Latest CA Population and Demographic Trends
The California Department of Finance has released its latest news — "State's Population Increases by 141,300 While Rate of Growth Continues to Decline" regarding 2018 to 2019 population growth, which includes highlights and snapshot trends of each county and region across the state. (You can also download the long-term 2010 to 2019 demographic tables by clicking here). Also, the department's deeper demographic breakdown (age, race, income, employment, poverty, health care, education, and social/housing characteristics) — courtesy of the American Community Survey by the U.S. Census Bureau — can be found by clicking here.

County Income and Poverty Estimates
The U.S. Census Bureau has released its "Small Area Income and Poverty Estimates (SAIPE) Program", which gives single-year estimates of income and poverty for all counties in California and the entire nation — as well as estimates of school-age children in poverty for all 13,000-plus school districts.

Demographic Profile and Projections: Southern California

  • *(Combined counties of Los Angeles, Orange, San Bernardino and Riverside)
  • Total population: 18.3 million (and will hit 19 million by 2025).
  • Working-age individuals (15 - 64 years old): 68 percent of total population in 2015 (and will fall to 64 percent by 2025).
  • Labor force (at least 16 years old who are working/looking for a job): 8.9 million out of 14.3 million adult population.
  • Labor force participation rate (adults who “want” to work): 62 percent (or 8.9 million individuals).
  • Unemployment rate: 3.4 percent (versus 3.9 in CA and 3.5 in U.S.)
  • Unemployed workers: 321,000.
  • Median household income: $73,000 as of 2019 (compared to $71,800 for CA and $60,400 for U.S.)
  • Poverty rate: 16 percent (versus 15 in CA and 13 in U.S.)
  • Education of population: 31 percent have a college degree; 29 percent some college; 21 percent high school diploma; and 19 percent no high school diploma.
  • Employment sector growth: click the following links for local future growth breakdowns (2014 – 2024) of nonfarm job projections by industry, occupation, education, and fastest-versus-largest areas of importance: Los Angeles County; Inland Empire; and Orange County.
  • * Data as of January 2020 from the California Center for Jobs and the Economy; California Employment Development Department; California Department of Finance; Federal Reserve Bank of St. Louis; U.S. Bureau of Economic Analysis; and U.S. Census Bureau

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