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Visitor Industry Outlook Conference
Regional Economic OutlookKimberly Ritter-Martinez, EconomistEconomist, Kyser Center for Economic ResearchOctober 13, 2015
The California and Southern California Economic Outlook
California
Southern California
The Housing Market
Forecast
The California Economy
Kyser Center for Economic Research
Economic Comparisons 2014 GDP
Los Angeles County21th Largest Economy $634.1 Billion GDP
Southern California
16th Largest Economy $1.0 Trillion GDP
California
8th Largest Economy $2.3 Trillion GDP
USA
Largest Economy in the World $17.3 Trillion GDP
Source: BLS, LAEDC estimates
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U.S. 5.1% CA 6.1%
Labor Markets in US & CA Nearly Healed
Source: US BLS, CA EDD Kyser Center for Economic Research
Unemployment Rate
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August 2015: 36,300 Jobs m/m and 470,000 | 3.0% y/y
Month to month changes in thousands, seasonally adjusted
California Non-farm Job Growth
Source: CA EDD, Labor Market Information Division, SA
-7%
-6%
-5%
-4%
-3%
-2%
-1%
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3%
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CA 3.0% US 2.0%
U.S. and California Annual Job Growth
Source: US BLS, CA EDD
August YTY % change in nonfarm jobs, seasonally adjusted
0.3%0.9%
1.5%1.7%
2.0%2.6%2.6%
3.1%3.1%
3.5%3.6%
5.4%
Bakersfield (700)Ventura (2,600)
Modesto (2,400)Los Angeles (73,100)
Oakland (21,500)Sacramento (23,000)
Stockton (5,400)San Diego (41,500)
Inland Empire (40,700)Orange County (52,900)
Fresno (11,200)San Jose (54,700)
Job Trends by California Metro Area
Source: CA EDD, Labor Market Information Division
Annual percentage change in nonfarm jobs (SA)Metro Area (YTY Job Gain August)
California Employment Growth, 2016
-3.12.02.13.75.37.39.2
14.415.9
18.724.1
46.548.5
53.357.4
82.4
-15.0 5.0 25.0 45.0 65.0 85.0 105.0
Finance & InsuranceOther ServicesMgmt. of EnterprisesManufacturingReal Estate, Rental & LeasingEducational ServicesInformationGovernmentTransport. & UtilitiesWholesale TradeRetail TradeConstructionHealth Care & Social AsstLeisure & HospitalityProf, Sci & Tech SrvsAdmin. & Support Srvs
Source: CA EDD, Labor Market Information Division, forecast by LAEDC
Total nonfarm job growth forecast for 2016 (thousands): +386.4 jobs
The Southern California Economy
Source: CA EDD, Labor Market Information Division Kyser Center for Economic Research
Local Unemployment Rates
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Los Angeles County (7.0%) Orange County (4.5%) Inland Empire (6.8%)Ventura County (5.8%) San Diego County (5.1%)
August 2015
L.A. 5-County Employment Growth, 2016
1.61.8
3.13.43.6
4.64.8
6.88.9
11.912.1
16.119.9
21.421.7
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0.0 5.0 10.0 15.0 20.0 25.0 30.0
InformationFinance & InsuranceMgmt. of EnterprisesReal Estate, Rental & LeasingOther ServicesGovernmentManufacturingEducational ServicesWholesale TradeLeisure & HospitalityRetail TradeTransport. & UtilitiesProf, Sci & Tech SrvsAdmin. & Support SrvsConstructionHealth Care & Social Asst
Source: CA EDD, Labor Market Information Division, forecast by LAEDC
Total nonfarm job growth forecast for 2016 (thousands): +168.0 jobs
L.A. 5-County Employment Growth, 2016
0.5%0.7%0.7%0.7%
1.4%1.4%1.5%
2.2%2.3%2.4%2.5%
3.0%3.7%
4.2%4.2%
5.4%7.0%
-1.0% 1.0% 3.0% 5.0% 7.0% 9.0% 11.0%
GovernmentInformationFinance & InsuranceManufacturingLeisure & HospitalityOther ServicesRetail TradeTotal Nonfarm EmploymentWholesale TradeHealth Care & Social AsstReal Estate, Rental & LeasingMgmt. of EnterprisesEducational ServicesAdmin. & Support SrvsProf, Sci & Tech SrvsTransport. & UtilitiesConstruction
Source: CA EDD, Labor Market Information Division, forecast by LAEDC
Annual Percent Change
Total nonfarm job growth forecast for 2016, percent change: +2.2%
Job Trends by County in 2016
County Unemployment Rate
Nonfarm Jobs Added
YTY % ChangeNonfarm Jobs
Los Angeles 6.3% 77,700 1.8%
Orange 3.4% 41,700 2.7%
Inland Empire 5.8% 44,100 3.3%
Ventura 5.1% 4,500 1.5%
Source: CA EDD, Labor Market Information Division
Leisure & Hospitality Job Counts Reach New Record High
Source: California EDD
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San Diego County
Inland Empire
Orange County
Los AngelesCounty
Thousands of jobs
Total Personal Income in SoCal
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2006 2007 2008 2009 2010 2011 2012 2013 2014 2015f 2016f
Los Angeles Orange Inland Empire San Diego Ventura
4.6%4.6%
4.4%2.4%6.5%5.8%
Annual Average, $Billions, % Annual Change
Source: US Bureau of Economic Analysis
7.2% 2.6%3.5% 2.2%-3.5%
Kyser Center for Economic Research
Housing
Drivers: Job and income growth Net increases in wealth Demographics Expected increases in mortgage rates (near-term)
Constraints Down payment sources Rising mortgage rates (longer-term, affordability) Strict underwriting requirements
Housing Market Drivers & Constraints
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Home SalesMedian Home Price
Home Sales & Median PricesLos Angeles County
New and existing, single-family homes and condosSales Price, Thousands
Source: California Real Estate Research Council; DataQuick
Kyser Center for Economic Research
Apartment Rents – Southern California
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Los Angeles Orange Riverside San Bernardino Ventura
Source: CA Real Estate Research Council
Source: US Census, C.A.R. Kyser Center for Economic Research
Homeownership Fundamentals
State CaliforniaSan
Francisco Los Angeles
Median Home Price $446,980 $1,247,570 $436,010
Price that Median Income Can Afford $304,490 $383,670 $275,530
Housing Affordability Index 30 10 30
Homeownership Rate (2009-13) 55.3% 36.6% 46.9%
Residential Building Permits Issued in Los Angeles County
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Multi-FamilySingle-Family
Permits issued, thousands
Source: CIRB, California Home Building Foundation, forecast by LAEDC
Housing Market Sales up over the year, inventories still tight
Modest price gains, some areas near peak
Rents in record territory, vacancy rates low
Homeowner’s equity building
Rates low but trending up, lending tight but easing somewhat
Housing affordability decreasing
Economic Forecast
California Five-Year Forecast
Forecast Source: IHS, LAEDC Kyser Center for Economic Research
2006-2010 2011-2015 2016-2020
GSP – Annual % Change 0.4% 2.3% 2.9%
Nonfarm Jobs Annual % Change -1.1% 2.5% 1.5%
Unemployment Rate 8.2% 9.0% 5.7%
Personal IncomeAnnual % Change 2.6% 5.3% 5.2%
Forecast Source: IHS, LAEDC Kyser Center for Economic Research
Annual Average
2006-2010 2011-2015 2016-2020
U.S. Housing Starts(Millions) 1.04 0.89 1.48
California Housing Permits(Thousands) 84.7 75.5 152.6
Housing & Construction Are Back (Finally!)
Forecast Source: LAEDC Kyser Center for Economic Research
Job Gains Advance at a Slower Pace
Kyser Center for Economic Research
Nonfarm Jobs in Millions % Yr % Yr
2010 2015 2020 10-15 16-20
Los Angeles 3.89 4.32 4.52 2.1% 0.9%
Orange 1.37 1.55 1.67 2.5% 1.6%
Riverside-San Bernardino 1.14 1.34 1.51 3.1% 2.5%
Ventura 0.27 0.30 0.32 1.6% 1.4%
Forecast SummaryThe California Economy
State’s job gains continue to outpace the nation Unemployment rate drops below 6% Housing and construction up substantially; Strong gains in health care; business services, & leisure &
hospitality Improved fiscal outlook; water issues loom large
The Southern California Economy Private sector job gains, steady decline in unemployment rate Leading industries: construction; health care; goods movement
and business services Global weakness could hurt local manufacturing and exports
For Further Insight into the Local Economy
find our September Economic Forecast & Industry Outlook
online at www.LAEDC.org/reports
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