In presenting the 2006 Economic Forecast for the San Fernando Valley, Dan Blake, Director of the California State University Northridge Economic Research Center said the Valley can expect another year of more than 10,000 new jobs and there’s no reason this period of growth shouldn’t continue in the long term. “As you come out of a recession, typically you have a bit of slack in capacity and services, and as the economy picks up that slack tends to get utilized and you see higher growth figures, usually in the short term,” said Blake. Coming out of a slight recession on 2001, Blake said, the economy started to demonstrably improve in 2004, and has settled down to cruising speed, from a “hectic” growth of 2.1 percent that year to 1.6 percent in 2005 and another 1.6 percent expected by the end of this year. “What it looks like now is that we’ve moved into a period of moderate to strong sustainable growth,” Blake said. The study reports that the Valley can expect the private sector to add 10,700 new jobs by the end of this year, another 12,300 in 2007 and 10,800 in 2008. Over the next two years, workers’ salaries should grow about four to five percent annually. Total earnings growth will be between 2.2 and 2.5 percent, however, as the slower growth of the public sector will likely offset private sector increases. Most of the industry sectors in the Valley will participate in this year’s growth. The information sector, which includes entertainment related jobs, is expected to grow at 3.3 percent, followed closely by the health care sector which is projected to grow at 3.2 percent. “Information and entertainment, that’s always a difficult one to forecast, but it’s one that’s been helped in terms of the U.S. dollar,” said Blake. “It’s been losing some of its value in terms of some of the other currencies, particularly the Canadian dollar, and that’s taking away some of the attractiveness of going there for shoots. There’s always an attraction to staying near Hollywood where you have a large pool of actors, a large pool of processors and financial distribution. The city and California have also been responding with incentives to keep filming here.” Growth of over 3 percent in the health care field is somewhat of a reverse from the last couple of years, Blake said. “For the last couple of years it’s been slow, because hospitals have been looking for ways to economize. They’ve had a problem with operating revenues not meeting operating costs,” said Blake. “I think they’ve cut out what they can and have to resume a normal path based upon a moderately increasing population base and a definite aging of the population, you’re going to have baby boomers hitting their 60th birthday.” The departure of manufacturing jobs from the region has not reversed, but the losses are expected to slow during this year. The sector lost 2,000 jobs in 2004 and another 2,000 in 2005, but losses will be in the hundreds. The report found that the problem with manufacturing companies is not sales, but rather the continue pressure both domestically and internationally to make productivity gains. The report shows that California’s manufacturing industry produced 85 percent more real output between 1993 and 2000 while adding only 9.6 percent more employees. Higher workers’ compensation, health care and housing costs will continue to put pressure on California manufacturers. Not everyone who gets a job in the Valley will be living locally, however. While the population grew by 27,000 in the Valley in 2002, followed by 23,000 and just under 20,000 over the next respective years, real population growth the next year was just 13,400. This year real population growth should be about 13,500, falling to about 13,300 and 13,200 in 2007 and 2008, respectively. “Rising home prices have been discouraging that growth, so we’re getting the impact of that, where it wasn’t much of an impact in 2001, 2002 or 2003.” Home price increases, which have dropped somewhat from their astronomical levels in recent years to a still-staggering 17 percent will likely not keep up the same pace over the next few years. The forecast calls for price appreciation to drop below 10 percent in 2006 and continue falling over the next two years. Mark Schniepp, executive director of the California Economic Forecast, reported that 60 percent of county-wide job growth over the next five years will come from health care, information and professional and technical services. County-wide data, however, fails to show a complete picture of activity in areas like the Santa Clarita and Antelope Valleys. Northern Los Angeles County, he said, is the site of over 25 percent of housing being built in the entire county. The Antelope Valley, he said, has a growing need for construction workers while the county overall will likely show a decline in the sector. As the population is growing, Schniepp said, it’s driving the creation of local health care, business service and other support service jobs locally. Meanwhile, an expansion of Lockheed Martin and an increase in activity at Edwards Air Force Base is further bolstering the manufacturing sector. “There still isn’t much office jobs going, but that’s really for the next phase,” said Schniepp. “The Santa Clarita Valley has a much more mature economy, there’s all sorts of office space being created out there.” Schniepp said that Specialty Laboratories’ move last year from Santa Monica to Valencia, which created hundreds of jobs in the region, is emblematic of the well-paying, high-tech jobs finding a home in the Santa Clarita Valley.
Forecast Calls for Continued Job Growth