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Thursday, Feb 29, 2024

Valley Economy Shrank 5% in Pandemic, Grew 9% in 2021

The San Fernando Valley’s economy shrank 5 percent in the pandemic year 2020, but it bounced back in a big way in 2021, growing 9 percent, according to a report unveiled Monday at the Valley Economic Forecast breakfast.

That’s better that the Los Angeles metro area and the state as a whole.

“The San Fernando Valley is still a real economic hotspot, which provided it a degree of insulation” from the worst aspects of the pandemic, said Matthew Fienup, executive director of the Center for Economic Research and Forecasting at California Lutheran University in Thousand Oaks.

What’s more, the Valley is expected to outperform other regions in the coming years, he said. However, growth will be tethered by various policies and by high housing costs, which by one measure, appear to be higher in the Valley than anywhere else in the country.

Last year, the median home price in the San Fernando Valley was 11.8 times the median household income of Valley residents. That multiple is higher than the Los Angeles metro at 10.3 and much higher than the United States at 5.2. No place is higher than the Valley, Fienup said. The median house price in the San Fernando Valley was $967,000 in January, Fienup said, up a dramatic 30 percent from $740,000 when the coronavirus pandemic hit in April 2020.

The extremely high prices prevent many people from moving here and encourage residents to move out, which will be a drag on the local economy, he said.

Fienup made his presentation Monday morning before nearly 100 people who attended the Valley Economic Forecast Breakfast at the Hilton Woodland Hills hotel. The event was co-produced by California Lutheran’s economic forecasting unit and the Business Journal.

Fienup said he and Dan Hamilton, his colleague at the economic forecasting center, continue to be impressed with how sturdy and resilient the Valley’s economy remains.  

The Valley’s economic shrinkage of 5 percent in 2020 compares to 5.8 percent for the Los Angeles metro area and 2.8 percent for California. But it bounced back bigger in 2021, with the gross domestic output of the Valley growing 9 percent, better than the 6.1 percent surge in the Los Angeles metro area and 7.7 percent for the state.

Likewise, he said, he and Hamilton forecast economic growth this year to be 4.4 percent for the Valley, better than the 3.4 percent expected for the Los Angeles metro, 3.8 percent for California, and 3.1 percent for the United States.

After that, growth is expected to be lower, slowed by various policies, by inflation and by high federal debt.

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