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Thursday, Jan 26, 2023
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Web Exclusive: Recovery Slowgoing in L.A. County

The medical and private education sectors will be the few bright spots in the Southern California economy in the coming year as unemployment rates continue to rise and the housing and financial industries continue to struggle. Health services and private education will add jobs in Los Angeles County while manufacturing, retail and construction will have a decrease in jobs, according to the economic forecast released Feb. 18 by the Los Angeles Economic Development Corp. Research and development and technical jobs will also see employment gains, helped in part by the $787 billion economic stimulus from Washington. “There is a lot of fear but we will recover,” Jack Kyser, founding economist of the LAEDC’s Kyser Center for Economic Research, told a crowd of 600 at the Los Angeles Marriott. “Maybe in Southern California we will recover faster if we use all of our assets.” When the economic forecast took place a year ago, the word recession had not been applied to the weakening economy and the word stimulus wasn’t being bandied about on Capitol Hill. After a year of bank failures, retailer bankruptcies and massive layoffs across all industries there is no doubt the country is in a recession and the big question facing consumers, business people and elected officials is the length and depth of this period of no growth and what action can be taken to reduce the impacts. Contributing to the scenario are the cutbacks in both consumer and business spending, both of which are at levels not seen in decades. “Businesses are afraid to do anything that will cause problems with their finances and equipment is expensive,” said Nancy Sidhu, chief economist with the LAEDC. The auto and housing industries will have no relief in 2009, although housing prices in Los Angeles County may bottom out by the second quarter and stabilize in the second half of the year. Foreclosures will reach a peak in the second and third quarters, said Robert Kleinhenz, the deputy chief economist with the California Association of Realtors. Analysts and insiders from a number of industries gave their insights of what will happen in 2009 with the center point of the event being Kyser’s industry outlook and economic forecast. Unemployment in Los Angeles County will average 9.8 percent, with job losses going into double digits in the second half of the year. A number of industries, such as apparel and financial services will face new business models once the recovery begins. Banking, for instance, will see more federal regulation and a change in the players on the retail side, Kyser said. Health services will do well because of an increase in demand for medical services, especially from uninsured patients seeking treatment, Kyser said. “That puts pressure on hospitals and other health care providers but they are growing and continuing to add jobs,” Kyser said. Ventura County was an early entrant in the downturn, having seen layoffs in 2007 at biotech giant Amgen and when Countrywide Financial was acquired by Bank of America. More layoffs could be in future as Countrywide is incorporated within Bank of America, Kyser said. Coming as it did the day after President Barack Obama signed the stimulus bill and the same day he announced a $75 billion plan to aid homeowners facing foreclosure, some of the speakers tackled the issue of how the government assistance will help. California will get about 11 percent of the stimulus money, with at least 20 percent going to high tech research and development, 9 percent toward highway spending, and 14 percent to public transit, said Tim Ransdell, executive director of the California Institute for Federal Policy Research. Having money come to the state will help with its bond rating, which leads to sale of bonds to bring in money for infrastructure projects, Ransdell said. “Those projects are what will get the (stimulus) money flowing into the economy,” Ransdell said.

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