LAEDC 2004-2005 Five County Forecast and Industry Outlook Shows Good Economic Signs,But Some Calfornia Industries Are "Struggling"

Some of the Best business prospects: tourism, international trade, technology, and aerospace. Some of the Worst: Health Services, Apparel Industry, and the motion picture/TV production according to the LAEDC 2004-2005 Forecast

Los Angles, CA (PRWEB) February 9, 2004 --The economy of Southern California is on a growth track in 2004, but the state's poor business environment will limit job growth in the area," said Chief Economist and Senior Vice President Jack Kyser, Los Angeles County Economic Development Corporation (LAEDC). Moreover, many of the new jobs created will tend to be in lower wage occupations."

The LAEDCs 2004-2005 Economic Forecast and Industry Outlook," was released today (Monday, Feb. 9, 2004) at a workshop on state budget impacts on tourism, energy, transportation, population and housing. It can be downloaded at www.MayoCommunications.com or at http://laedc.info/pdf/LAEF-2004-02.pdf.

The industries with the best growth prospects include: classic aerospace, international trade, and tourism, while the technology sector will be turning around. The health services sector will continue to struggle during the year, but ironically there will still be a decent rate of job creation," said Kyser.

Local governments will see job losses during 2004, reflecting the state budget debacle. LAEDC contends a close watch also has to be kept on the entertainment industry, due to major contract negotiations at mid-year. This industry continues to struggle with run-away production and the growing threat of piracy."

New home construction in the region will ease back a little from 2003, which in most cases was the strongest performance since 1990. However, the region's population continues to grow, so the 'housing deficit will remain a problem," explained Kyser. There is concern about a housing 'bubble, but interest rates are forecast to increase moderately over the next two years, while the economy will be healthy. This is a much different situation from the early 1990s."

The forecast noted that the region's population will continue to grow, as will international trade. However, this was characterized as a "good news . . . bad news" scenario. While population growth means increased demand for goods and services, it also means that the region's multiple deficit" will worsen, including housing and transportation. Growth of international trade also means more jobs and opportunity, but this will just more pressure on the region's already overburdened transportation infrastructure, the study said.

In terms of job growth in 2004, Los Angeles County will set the pace with 31,300 nonfarm jobs, followed by the Riverside-San Bernardino area with 25,600, Orange County with 22,200, and San Diego County with14,600," said Kyser. The LAEDC Forecast pointed out the on-going discrepancy between the nonfarm employment survey and the household survey, which indicated a much stronger growth in 2003 and for 2004. This reflects a high level of new business formation as well as people working in new ways due to the high costs to business of adding workers. Unfortunately this is probably resulting in a leakage of tax revenue for government," he said.
   
The five-county forecast (LA, Orange, Riverside, San Bernardino, and Ventura) reveals that the area has a diverse economic base, which is not generally well-recognized. Kyser said, In 2003 the Los Angeles metro area was the nations largest manufacturing center (based on employment), Orange County ranked 9th, the Riverside-San
                      
Bernardino area was 17th and San Diego County place 19th. In fact, the average manufacturing employment in Southern Californias six counties of 953,000 jobs last year would rank the area second in the nation if it were a separate state, after California and ahead of Texas."

Health services is being held at a poor forecast rating for 2004 due to a variety of forces including: double digit rising health care cost rates, struggling hospitals with recently passed nursing staffing laws and smaller hospitals are closing. Seismic retrofitting requirements are also shaking up the industry.

Despite the woes, the forecast finds that the health services sector will add jobs in 2004, with LA County up by 6,100, while Orange County should add 1,400. The Riverside-San Bernardino counties should add 1,800 health care jobs, while San Diego County should create 1,200 during this year.    
                                                                    
Kyser noted that the concept of an export" industry is that it sells goods or services outside of the area, and brings in new money for the local economy. There are almost a dozen (11) significant export industries in Southern California, each with more than 100,000 employees.

The aerospace industry (including commercial aircraft, space/satellite-based communications equipment, defense and other space applications) moved up to a higher rating due to better prospects. The big news was Boeings decision to move forward with its '7E7 airliner. While it will be assembled in Washington, this project will still mean lots of sub-contracting work for Southern California area firms," said Kyser.
      
International trade also held steady for 2004 the report said, While trade volumes (as measured by two-way trade values) at the Los Angeles customs district will increase by 10.0percent in 2004 to a record $259.1 billion, it again is a good news/bad news situation," said Kyser. The good news is that growing trade activity creates an array of jobs, and the declining U.S. dollar is encouraging more local firms to export. However, all West Coast ports are still suffering the after-effects of the 2002 lock-out, and the resulting congestion."