Regional Economic Outlook Eric Hayes, Associate Economist Local Forecast.pdf · Financial...
Transcript of Regional Economic Outlook Eric Hayes, Associate Economist Local Forecast.pdf · Financial...
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Regional Economic OutlookEric Hayes, Associate EconomistLos Angeles County Economic Development Corporation
Institute for Applied Economics
March, 2020
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The “Tight” Labor Market &Slower Growth
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Unemployment Rates:
Source: BLS
3
4
5
6
7
8
9
10
11
12
13
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
U3 Unemployment
Los Angeles California United States San Gabriel
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0
5
10
15
20
25
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
U6 Unemployment,4-Quarter Moving Average
Los Angeles California United States
Unemployment Rates:
Source: BLS
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80.1 79.9
72.7 73.7
87.8 86.3
65
70
75
80
85
90
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Prime-Age Employment Rate,United States
Total Women Men
Prime Age Employment:
Source: BLS
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Prime Age Employment Drives Wage Growth:
Source: BLS
R² = 0.8171
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
4.0%
74% 75% 76% 77% 78% 79% 80% 81%
ECI Growth (y/y) vs Prime Age EmploymentQ1 2002 - Q3 2019
2002-2017
2019
2018
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1
2
3
4
5
6
7
US Wage Growth by Wage Quartile
1st 2nd 3rd 4th
Wage Growth:
Source: Atlanta Fed
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California Historical Employment Growth:
Sources: IHS
-200 0 200 400 600 800
Manufacturing
Financial Activities
Other Services
Information
Government
Construction & Natural Resources
Transp., Trade, & Utilities
Leisure & Hospitality
Professional & Business Svcs
Educational & Health Svcs
Thousands
10 Year Employment Change
Los Angeles Other Southern CA Rest of California
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San Gabriel Valley Historical Employment :
-10 -5 0 5 10 15 20 25 30 35
Manufacturing
Public Administration (Non HC/Edu)
Financial Activities
Education
Natural Resources & Mining
Information
Professional & Business Services
Retail Trade
Transportation & Utilities
Other Services
Construction
Wholesale Trade
Leisure & Hospitality
Health Services
Thousands
10-Year Employment Change
Sources: CA EDD, LAEDC Analysis
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California Employment Forecast:
Sources: IHS, Forecast by LAEDC
-20 20 60 100 140 180
Financial Activities
Other Services
Information
Manufacturing
Transp., Trade, & Utilities
Construction & Natural Resources
Government
Leisure & Hospitality
Professional & Business Svcs
Educational & Health Svcs
Thousands
2 Year Employment Forecast
Los Angeles Other Southern CA Rest of CA
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San Gabriel Valley Employment Forecast:
-2000 -1000 0 1000 2000 3000 4000 5000 6000 7000 8000
Manufacturing
Natural Resources & Mining
Public Administration (Non HC/Edu)
Financial Activities
Information
Other Services*
Wholesale Trade
Retail Trade
Transportation & Utilities
Education
Leisure & Hospitality
Professional & Business Services
Construction
Health Services
2 Year Employment Forecast
2020f 2021f
Sources: LAEDC
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California Economic Growth:
Sources: IHS, Forecast by LAEDC
-5.0%
0.0%
5.0%
10.0%
15.0%
1991 1996 2001 2006 2011 2016 2021f
Real GDP Growth Forecast
Los Angeles Other Southern CA Rest of California
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Demographic Headwinds
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Population Trends:
Source: CA DoF
-1.0%
-0.5%
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Year-over-Year % Change In Population
Los Angeles California San Gabriel Valley
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Low Fertility:
Source: CDC
2.20
1.631.6
1.7
1.8
1.9
2.0
2.1
2.2
2.3
Total Fertility Rate
United States California
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Outmigration:
-1000
-800
-600
-400
-200
0
200
400
600
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Tho
usa
nd
s
California Domestic Migration
Coming Going Net
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-1%
1%
2%
3%
4%
5%
6%
19
88
19
89
19
90
19
91
19
92
19
93
19
94
19
95
19
96
19
97
19
98
19
99
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
20
15
20
16
20
17
20
18
Labor Force Productivity % Growth (Year-Over-Year)
Low Labor Force Productivity:
Source: BLS
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Housing Crisis
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Housing Undersupply
Source: US Census Bureau
116.0
22.0
45.9
2.10
50
100
150
200
250
Tho
usa
nd
s
Housing Permits Issued
California Los Angeles SCAG San Gabriel
SCAG Region RHNA Target: 1.3 million over 8 years
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Home Prices vs Household Incomes:
Source: US Census ACS
9.2
7.3
3.7
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Median Home Price to Median Household Income Ratio
Los Angeles California United States
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Home Prices vs Household Incomes:
6.6
9.2
10.3
9.5
5
6
7
8
9
10
11
2010 2011 2012 2013 2014 2015 2016 2017 2018
Median Home Price to Median Household Income
East San Gabriel Valley Pasadena Southwest San Gabriel Valley Upper San Gabriel Valley
Source: US Census ACS
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Home Affordability
Source: C.A.R.
0%
10%
20%
30%
40%
50%
60%
Housing Affordability, Traditional
CA LA
Minimum Qualifying Income LA County Q3 2019: $127,200
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SoCal Apartment Rents
Source: Zillow; American Community Survey
$1,915
$2,548
$2,612
$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000
LA/OC Inland Empire San Diego Ventura
Estimated Annual Rent in L.A. County (2018): ~$31,000
Median HH Income in Los Angeles County (2018): $68,093
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$2,187
$2,710
$1,500
$1,700
$1,900
$2,100
$2,300
$2,500
$2,700
$2,9002
01
0-0
9
20
11
-01
20
11
-05
20
11
-09
20
12
-01
20
12
-05
20
12
-09
20
13
-01
20
13
-05
20
13
-09
20
14
-01
20
14
-05
20
14
-09
20
15
-01
20
15
-05
20
15
-09
20
16
-01
20
16
-05
20
16
-09
20
17
-01
20
17
-05
20
17
-09
20
18
-01
20
18
-05
20
18
-09
20
19
-01
20
19
-05
20
19
-09
20
20
-01
Pomona Pasadena El Monte West Covina Alhambra
SGV Median Apartment Rents
Source: Zillow
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Economic Upside Potential
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California Venture Capital Investment
Source: PwC
0
5
10
15
20
25
30
Q1 1995 Q1 1997 Q1 1999 Q1 2001 Q1 2003 Q1 2005 Q1 2007 Q1 2009 Q1 2011 Q1 2013 Q1 2015 Q1 2017 Q1 2019
0
100
200
300
400
500
600
700
800
900
1000
Bill
ion
s
Venture Capital Investment
Los Angeles California Number of deals
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6 6
14.3
2.5
23.8
1
2.5
15
0
5
10
15
20
25
Amazon(2019)
Apple (2019) AT&T(including
HBO) (2018)
HBO (2017) Disney (Non-Sports) (2019)
Disney+(2019)
Hulu (2018) Netflix (2019)
Content Investment ($billions)
Streaming Content Investment
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0
1
2
3
4
5
6
7
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Bill
ion
s
LA Metro Budget
Regional Transit Expansion:
Source: LA Metro
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Conclusions:
• Still more slack in the labor market, particularly in Los Angeles
County
• Low to moderate but sustained economic growth in the near
term
• Employment expansion, particularly in health care
• Barriers To Growth:
• Demographic Headwinds
• Housing Crisis
• Potential for Greater Growth:
• Business investment, particularly in the digital and traditional media ecosystem
• Transit expansion, both direct fiscal stimulus and helping to connect labor market
• Wage growth for the bottom quartile
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COVID-19 Coronavirus:
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Risks:
Supply Side• Supply chain disruption: primary and intermediate goods halted
• Labor Supply: dramatic reduction in labor supply
Demand Side• Quarantine directly reduces consumption of goods and services
• Part time and contingent workers: Don’t work = don’t get paid
Local• High trade exposure through the ports: preliminary numbers suggest container
traffic down around 25% y/y
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$-
$50
$100
$150
$200
$250
$300
$350
Exports Imports
Bill
ion
s
Los Angeles Customs District Trade Value 2019
Other China
Exports to China: $2.7 billion
Imports from China $132.7 billion
Trade Exposure:
Source: US Census
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Trade Exposure:
• Employment in Trade, Transportation & Utilities:
Los Angeles County: 850,000San Gabriel Valley: 151,000
• Retail Sales Down around 80-90% y/y in parts of China
• Supply shortage means retail consumption down locally
• So trade getting hit from supply shock and demand shock
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Leisure & Hospitality Exposure:
Tourism• Employment in Leisure & Hospitality:
Los Angeles County: 545,000San Gabriel Valley: 84,000
• LAX sees over 50 million visitors a year
• Nearly 8 million international visitors, Over 1 million from China
Local Consumption
• Establishment closures due to lack of workers (restaurants, bars, theaters etc.)
• Lack of demand as consumer confidence falls
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Manufacturing Exposure:
50
35.7
30
35
40
45
50
55
NBS (China) Manufacturing PMI
Source: National Bureau of Statistics of China
Employment in Manufacturing:
LA County: 343,000SGV: 54,000
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1.81.5
0.3
-3.1
-4
-3
-2
-1
0
1
2
3
Baseline GDP Growth 1-Month Disruption 3-Month Disruption 6-Month Disruption
Los Angeles County 2020 Real GDP Growth(Preliminary Estimates)
Los Angeles Potential GDP Impacts:
Source: LAEDC Forecast
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Thank you!
For Further Insight into the Local Economy Visit:
LAEDC Research & Data:
http://laedc.org/research-data/