Pasadena Chamber of Commerce

Pasadena Chamber of Commerce

Regional Economic OutlookKimberly Ritter-Martinez, EconomistLAEDC Kyser Center for Economic ResearchOctober 23, 2014

U.S. Economy

California Economy

Los Angeles and the San Gabriel Valley

Five-Year Outlook

Conclusion

Outline

The U.S. Economy

U.S. Economic Growth

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014f 2015f

3.83.3

2.7

1.8

-0.3

-2.8

2.5

1.6

2.3 2.2 2.22.9

Sources: Bureau of Economic Analysis, forecasts by LAEDC

Annual % Change

Kyser Center for Economic Research

Key Sectors of Macroeconomy

Consumer Sector

Business Sector

Government

International Trade

• Labor Market• Inflation

Other Macro Indicators:

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013-3

-2

-1

0

1

2

3

4

5

6

7

2.4

U.S. Personal Consumption

Source: Bureau of Economic Analysis

Annual % Change


Equipment Intellectual Property Structures-2%

0%

2%

4%

6%

8%

10%

4.6%

3.4%

-0.5%

6.5%

3.9%

7.4%7.5%

5.1%

1.1%

2013 2014 2015

Annual Percentage Change

Business Investment Spending

Source: IHS, LAEDC

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014f

2015f

10

12

14

16

18

20

22

24

26Receipts Outlays

Federal Budget Receipts & Outlays as Percentage of GDP

Source: Office of Management & Budget Kyser Center for Economic Research

Global Economic Outlook

World Euro Area Developing Asia

Latin America/Carb.

Japan-2

0

2

4

6

8

10

122012 2013 2014F 2015F

Annual % Growth

Source: IMF World Economic Outlook, July 2014 Update Kyser Center for Economic Research

U.S. Labor Market in Expansion Phase

0 4 8 12 16 20 24 28 32 36 40 44 48 52 56 60 64 68 72 76 80 8492

94

96

98

100

102

104

100.5

11/1973 – 3/1975

7/1981 – 11/1982

7/1990 - 3/19913/2001 – 11/2001

1/1980 – 7/1980

Source: Bureau of Labor Statistics

12/2007 – 6/2009

Months

Jan-9

0

Jan-9

1

Jan-9

2

Jan-9

3

Jan-9

4

Jan-9

5

Jan-9

6

Jan-9

7

Jan-9

8

Jan-9

9

Jan-0

0

Jan-0

1

Jan-0

2

Jan-0

3

Jan-0

4

Jan-0

5

Jan-0

6

Jan-0

7

Jan-0

8

Jan-0

9

Jan-1

0

Jan-1

1

Jan-1

2

Jan-1

3

Jan-1

40%

5%

10%

15%

U.S. Average 1990-Now

U-Rate ApproachingNatural Rate (mid-5%)

Source: US Bureau of Labor Statistics Kyser Center for Economic Research

Seasonally Adjusted, Sept 2014: 5.9%

Source: US Bureau of Labor StatisticsKyser Center for Economic Research

U.S. Nonfarm Job Growth SteadyMTM changes in thousands, Seasonally Adjusted

Jan

-08

Ap

r-0

8

Jul-0

8

Oct

-08

Jan

-09

Ap

r-0

9

Jul-0

9

Oct

-09

Jan

-10

Ap

r-1

0

Jul-1

0

Oct

-10

Jan

-11

Ap

r-1

1

Jul-1

1

Oct

-11

Jan

-12

Ap

r-1

2

Jul-1

2

Oct

-12

Jan

-13

Ap

r-1

3

Jul-1

3

Oct

-13

Jan

-14

Ap

r-1

4

Jul-1

4

-1,000

-800

-600

-400

-200

0

200

400

600

MTM Job Changes3 per. Moving Avg. (MTM)

Quantitative Easing (QE)

Short Term Rates in second half of 2015

Q: When Will Fed Raise Rates?

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 201440%

45%

50%

55%

60%

65%

70%


Declining Labor Force Participation Rate - - Structural or Cyclical?

Earliest Boomers Hit 65 Yrs in 2011!


19

68

19

70

19

72

19

74

19

76

19

78

19

80

19

82

19

84

19

86

19

88

19

90

19

92

19

94

19

96

19

98

20

00

20

02

20

04

20

06

20

08

20

10

20

12

20

14

10%

11%

12%

13%

14%

15%

16%

17%

18%

19%

20%Part Time % Ave 1990-Now


High % of Part-Time Employment:Structural or Cyclical?


2007 2008 2009 2010 2011 2012 2013 2014-0.5%

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

4.0%

Annual % Change in Hourly Wage Annual Inflation Rate


Wage Gains vs. Inflation


Fed to end Quantitative Easing (QE) soon

Fed to raise short term rates in second half of 2015

Concern about Fed getting ‘ahead of the curve’ and ability to react to future events

Q: When Will Fed Raise Rates?

Forecast Source: LAEDC Kyser Center for Economic Research

U.S. Economy to Accelerate in 2015

2011 2012 2013 2014e 2015f

GDP - Annual % Chg. 1.6% 2.3% 2.2% 2.2% 2.9%

Nonfarm Jobs - Annual % Chg.

1.2% 1.7% 1.7% 1.8% 1.8%

Unemployment Rate 8.9% 8.1% 7.4% 6.3% 5.8%

Consumer Prices - Annual % Chg.

3.2% 2.1% 1.5% 1.9% 2.2%

The State and Local Economies


Economic Comparisons 2013 GDP

Los Angeles County

21th Largest Economy $583.1 Billion GDP

Southern California

16th Largest Economy $948.2 Billion GDP

California8th Largest Economy $2.2 Trillion GDP

USA

Largest Economy in the World $16.8 Trillion GDP

Source: BLS, LAEDC estimates

Moved up from 9th place!

Jan-9

0

Jan-9

1

Jan-9

2

Jan-9

3

Jan-9

4

Jan-9

5

Jan-9

6

Jan-9

7

Jan-9

8

Jan-9

9

Jan-0

0

Jan-0

1

Jan-0

2

Jan-0

3

Jan-0

4

Jan-0

5

Jan-0

6

Jan-0

7

Jan-0

8

Jan-0

9

Jan-1

0

Jan-1

1

Jan-1

2

Jan-1

3

Jan-1

40%

5%

10%

15%

U.S. CA

California U-Rate Falling Quickly…

Source: US BLS, CA EDD Kyser Center for Economic Research

Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14-7%

-6%

-5%

-4%

-3%

-2%

-1%

0%

1%

2%

3%

4%

US CA

…and Adding Jobs Faster than U.S.

Source: US BLS, CA EDD Kyser Center for Economic Research

Source: CA EDD, Labor Market Information Division

Job Trends by California Metro Area

ModestoSacramentoLos Angeles

VenturaOrange CountyStockton MSA

BakersfieldOakland

Riverside-San BernardinoSan Diego

Fresno MSASan Jose

San Francisco

0% 1% 2% 3% 4%

1.3%1.4%

1.5%1.6%

1.8%1.9%

2.0%2.1%2.1%

2.4%2.9%

3.2%3.5%

Annual percent change in nonfarm jobs

Sept. 2014: +297,000, +1.9% YTY

Source: CA EDD, Labor Market Information Division Kyser Center for Economic Research

Job Trends by Industry – CA

Nondurable Goods Finance & Insurance

Government Wholesale Trade

Durable Goods Retail Trade

Transportation, Warehousing & Utilities Real Estate & Rental & Leasing

Leisure & Hospitality Educational Services

Health Care & Social Assistance Management of Companies & Enterprises

Professional, Scientific & Technical Services Information

Administrative & Support & Waste Services Construction

-4% -2% 0% 2% 4% 6% 8%

-2.7%-2.2%

-0.1%1.0%1.2%1.3%

1.6%2.2%2.3%2.4%

3.0%3.6%

3.9%4.9%5.0%

6.0%

Sept. 2014: +297,000, +1.9% YTY

Annual percent change in nonfarm jobs


California – Steady Progress

2011 2012 2013 2014e 2015f

Nonfarm Jobs - annual % chg.

1.0% 2.4% 3.0% 2.2% 2.2%

Unemployment Rate 11.8% 10.4% 8.9% 7.5% 7.0%

Personal Income - annual % chg.

6.6% 5.0% 2.8% 4.4% 5.1%

Total Taxable Sales - % chg.

9.1% 7.3% 5.1% 5.0% 5.2%

Housing Permits - thousands of units

41.1 57.6 82.3 86.4 110.6

Jan-0

0

Aug-00

Mar-0

1

Oct

-01

May-

02

Dec-02

Jul-0

3

Feb-04

Sep-04

Apr-05

Nov-05

Jun-0

6

Jan-0

7

Aug-07

Mar-0

8

Oct

-08

May-

09

Dec-09

Jul-1

0

Feb-11

Sep-11

Apr-12

Nov-12

Jun-1

3

Jan-1

4

Aug-14

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

Los Angeles County (8.0%) Orange County (5.1%) Inland Empire (8.2%)Ventura County (6.4%) San Diego County (5.9%)

Local Unemployment Rates

Source: CA EDD, Labor Market Information Division, NSA

September 2014

Nondurable Goods Mfg.Durable Goods Mfg.

Wholesale TradeFinance & Insurance

GovernmentEducation

Transp't, Warehsg & UtilitiesLeisure & Hospitality

Retail TradeHealth Care & Social Assistance

Real Estate, Rental & LeasingInformation

Prof., Sci. & Technical ServicesMgmt. Companies & Enterprises

Admin. Support & Waste ServicesMining & Logging

Construction

-7.1%-2.2%

-1.4%-1.0%

0.0%1.2%1.3%

2.1%2.6%2.6%

3.5%4.2%4.6%

5.8%5.9%

6.4%8.6%


Job Trends by Industry – Los AngelesYTY % change in nonfarm employment


Sept. 2014: +73,800 jobs, +1.8% YTY


Job Trends by Industry – San Gabriel Valley

Other Services

Natural Resources & Mining

Financial Activities

Information

Construction

Transporation & Utilities

Government

Wholesale Trade

Retail Trade

Manufacturing

Professional & Business Services

Leisure & Hospitality

Education & Health Services

-18.39

0.09

0.39

0.52

0.73

0.78

1.43

2.53

3.93

4.26

4.92

5.09

30.02

2012-2013 change in nonfarm employment, Thousands


35,622 jobs | 5.9%

2006 2007 2008 2009 2010 2011 2012 2013 200.0

300.0

400.0

500.0

600.0

700.0

800.0

647 645 650613 597 599 609

644

San Gabriel Valley Employment TrendsAnnual average employment, thousands

Sources: California EDD., LMID ES202 data

Average Annual Wage by Region, 2013

Source: California EDD., LMID, ES202 data

South LAAntelope Valley

East LANorth Gateway

Santa ClaritaSan Gabriel Valley

Long Beach/LakewoodWest San Fernando Valley

Crenshaw/Mid-City/HollywoodEast San Fernando Valley

South Bay/LAXCentral/Downtown LA

Westside

Los Angeles County

$33,381$39,871

$42,573$43,031$43,143$45,340

$48,719$52,537$53,598$54,596

$59,673$73,845

$77,269

$53,719

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012e2013f-15%

-10%

-5%

0%

5%

10%

15%

$0

$2

$4

$6

$8

$10

$12

$14

$16

$18

$20Taxable Retail Sales ($millions) Annual % Change

San Gabriel Valley Taxable Retail Sales

Source: California State Board of Equalization (2001-11), LAEDC (2012-13)

Annual % change $Millions

Trade Entertainment Business Services Private Education Institutions Aerospace & Analytical Instruments Fashion & Apparel Manufacturing Hospitality Local Serving: Retail, Medical


Major Industries in Southern California

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014f

11.813.1

14.2

15.8 15.714.3

11.8

14.1 14 14.1 14.615.4

Millions of TEUs

Container Throughput San Pedro Bay Ports

Sources: Ports of Los Angeles and Long Beach; forecast by LAEDC Kyser Center for Economic Research

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

Y

TD

0

200,000

400,000

600,000

800,000

1,000,000

1,200,000Durable Goods Nondurable Goods

Southern California Manufacturing Employment

Source: California EDD Kyser Center for Economic Research

Manufacturing Trends

•Machinery Mfg•Furniture•Miscellaneous

Durable GoodsAdding Jobs:

•Petro-Chemical•Food•Aerospace•Electronics•Apparel/Textiles

Losing Jobs:


Source: US Bureau of Economic Analysis; IHS Kyser Center for Economic Research

Value of Manufacturing Output, California

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

0

50

100

150

200

250

300Durable Goods Nondurable Goods

$ Billions (in 2009 Dollars)


Jan-06Feb-06Mar-06Apr-06May-06Jun-06Jul-06Aug-06Sep-06Oct-06Nov-06Dec-06Jan-07Feb-07Mar-07Apr-07May-07Jun-07Jul-07Aug-07Sep-07Oct-07Nov-07Dec-07Jan-08Feb-08Mar-08Apr-08May-08Jun-08Jul-08Aug-08Sep-08Oct-08Nov-08Dec-08Jan-09Feb-09Mar-09Apr-09May-09Jun-09Jul-09Aug-09Sep-09Oct-09Nov-09Dec-09Jan-10Feb-10Mar-10Apr-10May-10Jun-10Jul-10Aug-10Sep-10Oct-10Nov-10Dec-10Jan-11Feb-11Mar-11Apr-11May-11Jun-11Jul-11Aug-11Sep-11Oct-11Nov-11Dec-11Jan-12Feb-12Mar-12Apr-12May-12Jun-12Jul-12Aug-12Sep-12Oct-12Nov-12Dec-12Jan-13Feb-13Mar-13Apr-13May-13Jun-13Jul-13Aug-13Sep-13Oct-13Nov-13Dec-13Jan-14Feb-14Mar-14Apr-14May-14Jun-14Jul-14Aug-140

2,000

4,000

6,000

8,000

10,000

12,000

$0

$100

$200

$300

$400

$500

$600

Home Sales

Median Home Price

Home Sales & Median Prices L.A. County New and existing, single-family homes and condos

Sales Price, Thousands

Source: California Real Estate Research Council; DataQuick

Residential Building Permits Issued in Los Angeles County

'03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14f '15f0

5

10

15

20

25

30

10 12 12 108

3 2 2 2 4 4 5 5

11

15 14 16

13

10

3 58

913

1416

Multi-FamilySingle-Family

Permits issued, thousands

Source: CIRB, California Home Building Foundation, forecast by LAEDC Kyser Center for Economic Research

Residential Building Permits Issued inSan Gabriel Valley

Source: CIRB, California Home Building Foundation, forecast by LAEDC

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 YTD

0

500

1,000

1,500

2,000

2,500

3,000

3,500

1293 1360 1395 1267 1319 1195

557329 354

586 533 647 688

893

1765

754 1015666 1059

1527

270 219254 334

11481492

Single-Family Multi-Family

Permitted housing units

21.4%

U.S. Five-Year Forecast

Forecast Source: IHS, LAEDC Kyser Center for Economic Research

2009-2009 2010-2014 2015-2019

GDP – Annual % Change 0.9% 2.2% 2.8%

Nonfarm Jobs Annual % Change

-0.1% 1.1% 1.3%

Unemployment Rate 5.9% 8.0% 5.3%

Consumer Prices Annual % Change

2.6% 2.0% 1.8%

California Five-Year Forecast


2009-2009 2010-2014 2015-2019

GSP – Annual % Change 0.9% 2.1% 3.1%

Nonfarm Jobs Annual % Change

-0.4% 1.5% 1.6%

Unemployment Rate 6.9% 10.2% 6.6%

Personal IncomeAnnual % Change

3.1% 4.3% 5.5%


Annual Average

2005-2009 2010-2014 2015-19

U.S. Housing Starts(Millions)

1,336 787 1,494

California Housing Permits(Thousands)

117.5 63.6 142.5

New Home Construction to Drive Growth


Job Gains Continue


Nonfarm Jobs in Millions % Yr % Yr

2009 2014 2019 09-14 14-19

Los Angeles 3.95 4.19 4.45 1.2% 1.2%

Orange 1.38 1.48 1.63 1.4% 1.8%

Riverside-San Bernardino

1.16 1.26 1.43 1.6% 2.6%

Ventura 0.28 0.29 0.32 1.0% 1.7%

CA Population Changes 2014-24

20%

29%20%

23%

9%

Post-Millenial Millenials Gen X

Boomers Pre-Boomer


33%

28%

18%

17%

5%

Post-Millenial Millenials Gen X

Boomers Pre-Boomer

2014 2024

Entitlement Programs

Employment/Workforce Needs

Housing Market

Market Opportunities

Implications For…

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