Los Angeles, CA (PRWEB) July 16, 2008
The California economy is "on the brink of a recession," some parts of the state are already in recession, and the cause of the downturn will persist into 2009, the Los Angeles County Economic Development Corp. (LAEDC) and the Kyser Center for Economic Research said Wednesday.
LAEDC and the Kyser Center released two major economic reports - the 2008-2009 Mid-Year Economic Forecast and the Foreign Direct Investment Report.
"The housing market crash, problems in the financial sector, and soaring prices for gasoline and diesel have severely hammered the state and local economies," said Jack Kyser, LAEDC chief economist and senior vice president. "They are on the brink of falling into a recession."
The Kyser Center for Economic Research said a housing recovery might come as late as 2010. High gasoline and diesel prices will continue to hurt businesses and consumers - and could change the way key industries such as international trade and tourism operate. California is officially in a drought and water supply will affect the agriculture industry as well as development patterns. Government budgets are under extreme stress. Program and job cuts are possible. Kyser said employment in California will slip by 0.2 percent, or 29,600 jobs, in 2008.
"The unemployment rate for the year will average a painful 6.4 percent," he said. "Muted growth will return in 2009 with non-farm employment increasing by 0.6 percent or by 85,600 jobs."
Among the bright spots, the LAEDC Forecast noted, San Francisco and San Jose are experiencing relatively low economic discomfort. However, some areas - including two in Southern California - can be considered to be in a recession now.
"Orange County lost 5,900 jobs in 2007, and will lose 18,600 more in 2008," said Kyser. "Much of this reflects fallout from the sub-prime lending mess."
Riverside-San Bernardino had minimal job growth in 2007 and stands to lose 20,500 jobs in 2008, due to the steep fall off in new homebuilding and softness in international trade/logistics.
Los Angeles and San Diego counties should escape job losses in 2008 - with L.A. County adding 2,300 jobs and San Diego County adding 1,200. Both, however, will see spikes in their unemployment rates, with LA County jumping from 5 percent in 2007 to 6.2 percent in 2008 and San Diego County rising from 4.6 percent in 2007 to 5.7 percent in 2008.
The best prospects for the rest of the year are in technology and bio-medicine.
The entertainment industry got off to a sour start in 2008 due to the Writers Guild of America strike, which cost the local economy $2.5 billion. Difficult contract talks between producers and the Screen Actors Guild have contributed to a slowdown in production of feature films in Los Angeles. The standoff could continue for some time, and industry employment could decline by 5,500 direct jobs in 2008.
For the full story and 2008 LAEDC Economic Forecast and a groundbreaking report issued today on foreign direct investment in Los Angeles County visit: http://tinyurl.com/LAEDCstudies