Valley Outpaces City, County in Recovery By JACQUELINE FOX Staff Reporter Like most of Southern California, the Valley economy took a beating during the eight quarters between 2001 and 2002, hit particularly hard by job losses in the entertainment and manufacturing sectors. But by comparison, the Valley’s recovery from the recession seems to have outpaced that of the city and county throughout most of 2002, beating out projections for population growth and showing recovery, albeit modest recovery, across some business sectors, according to a report released Nov. 7 by the San Fernando Valley Economic Research Center at Cal State Northridge. Job growth in the Valley picked up steam in 2002, with private sector employment figures up by 2,000 jobs following a loss in 2001 of nearly 4,900 jobs. Although mild, the Valley’s 0.3 percent job growth in 2002 outperformed citywide figures of -1.6 percent and statewide job growth of -1.0 percent. CSUN officials who compiled the data for the report, called the San Fernando Valley Economic Report 2003-2004, are projecting the remainder of those Valley jobs will be recovered by 2005. “The Valley weathered the recession well and for the year 2002 we were definitely at a gaining point,” said Dr. Daniel Blake, the center’s director. Blake presented the report, which, for the last five years had been called the Report of Findings, during the Valley Industry and Commerce Association’s Annual Business Forecast Conference. “We project that the rest of those jobs previously lost will be recovered this next full year. Actually, predictions are for figures that will give us a few hundred more (jobs) than what we lost.” The report’s findings are based on a combination of data from Census 2000 figures as well as information provided by several local and state agencies, and reflects data available as late as August 2003. Valley private-sector payroll figures grew by 1.5 percent in 2002, according to the report, however, with adjustments for inflation those figures actually slipped by 1.2 percent over 2001. Nonetheless, there are contrasts: countywide, real private sector payroll dipped by 2.6 percent and, statewide, the figures fell by 4.5 percent. “It’s modest growth, but it’s better to grow slowly than not at all,” said Blake. Unemployment insurance claims for the Valley dipped slightly in 2002 after hitting an eight-year high in the second quarter, but according to the report, remain high and began climbing again during the first half of 2003. The number of claims shot up to nearly 34,000 in the first half of 2002, fell below 25,000 claims by the end of the year, but as of the first of this year shot back up to just under 30,000 claims. The 2003 spike, said Blake, could be due to a combination of seasonal unemployment patterns and unemployment insurance extensions offered in late 2002. Housing boost It should come as no surprise that the Valley’s housing market, fueled by record-low interest rates, helped prop up the local economy throughout the recovery. Median home prices in the Valley rose to $369,000, compared to a median price of $326,000 countywide. As a result of the strength of the market, housing inventories in the Valley declined in 2002 to a 2.1 months supply, down from 2.8 months in 2001. Despite the recession, home appreciation values kept notices of default and foreclosures on a downward trend, with the Valley’s share of countywide foreclosure figures down from the peak of 30 percent following the 1994 Northridge earthquake to between 13 and 15 percent in 2002 and holding steady. Rental vacancies in the Valley remained below 3 percent in 2002, sending average rents at large multi-family dwellings soaring by 6.3 percent. According to the report, rents are expected to increase by 8.0 percent for 2003, which could have an impact on consumer spending going into the following year. The Valley’s information industry, a new Census classification, now includes telecommunications, Internet service and other information processing sectors with entertainment, publishing and broadcasting. That sector emerged as the Valley’s largest employer with 92,500 jobs and 22 percent of the private sector payroll. But the industry also lost 6.0 percent of its jobs in 2002 as runaway production, a declining orders for upgrades by businesses in their information systems and other factors continued to come into play. “The Valley has and will continue to have significant exposure to the motion picture industry, and they are definitely being impacted by runaway production,” said Jack Kyser, chief economist for the Los Angeles Economic Development Corp. Kyser joined Blake as a speaker during VICA’s forecast conference. He said prior to the event that he intended to offer data at the event that backed up the Valley’s strength against the city and county as a whole, pointing out that the area has continued to see major expansions of $1 million or more for local businesses with 19 this year so far, down only two from 21 in 2002. “Basically what that shows is that business has been struggling with a difficult environment, but they have been and are still planning to expand,” said Kyser. “The real question is how many jobs will they add?” Local pressure Bill Powers, chairman of the United Chambers of Commerce of the San Fernando Valley said he wasn’t surprised the Valley showed stronger growth than the rest of the region. He also said he’s optimistic that Gov.-elect Arnold Schwarzenegger’s pro-business policies will spur further growth, but cautioned that, on the local level, more pressure must be put on elected officials if that recovery is to remain on track. “I think the Valley has been a mainstay of the local economy for many years and I think it’s a tribute to the strength of the economy as a whole that we have faired so well,” said Powers. “But the city fathers need to hunker down and realize that their decision making is the same kind of decision making that led to the recall of Gov. Davis. They need to think about businesses as an ally rather than an enemy.” According to the CSUN report, manufacturing was the second largest industry in 2002 with 82,900 jobs and 13 percent of the payroll. However, the recession did force job losses in the Valley of nearly 10 percent. Losses in information and manufacturing sectors were offset, however, by a 4.5 percent jump in the finance, insurance, real estate and leasing/rental industries, 3.5 percent growth in retail, 2.7 percent growth for biotech and 2.5 percent growth in the construction industry. The Valley population also outperformed previous projections in 2002 with growth averages of 1.8 percent, instead of a previously estimated 0.6 percent. The Valley gained 27,500 more people in 2002, with roughly 6 percent of those individuals coming from somewhere else in the state, 7 percent from outside California and 11 percent from another country. Passenger levels at Burbank Airport, according to the report, are back up to pre-9/11 levels. Hotel occupancies remain down, however, by about 5 points, but Blake pointed out that those losses reflect room-rate cuts of about 5 percent. Two quality of life issues reflected in the CSUN report show flat performance, which is both good news and bad, considering the categories: Crime remained stable in 2002 over 2001 levels in the Valley, but there are no indicators showing that freeway traffic improved.
Valley Outpaces City, County in Recovery