While Southern California can expect steady economic growth overall in 2006; the entertainment, housing and retail industries may face trouble, experts said at the Los Angeles Economic Development Corporation’s annual economic forecast. Jack Kyser, the LAEDC’s chief economist analyzed several “vulnerable” industries. The motion picture/television production industry, he said, still faces changing business structures, labor union disagreements and runaway production. Kyser said he expects a slight decrease in the housing resale market, and the LAEDC is expecting a slight decline in new home construction. He also said that the retail industry may take a hit due to inconsistent spending patterns and over-capacity, which may affect cities in Southern California that rely on retail to generate tax revenue. Governmental agencies in the state may face possible bankruptcies due to a ruling by the Federal Government Accounting Standards Board requiring local governments to find a way to pay for pension fund shortfalls and retiree healthcare liabilities. Meanwhile, experts expect positive growth in the aerospace, international trade, professional business services, and tourism and travel industries. Nonresidential construction will likely grow in Los Angeles. Office and industrial vacancy rates in the region are falling, and demand for industrial space continues to grow. LA County will see employment growth of about 0.9 percent, adding approximately 37,900 more jobs. Kyser said that there are several indicators worth monitoring over the coming year including inflation, the state infrastructure bond issue and land availability.
Steady Economic Growth Seen for 2006, Retail and Entertainment Sectors Face Challenges