Diverse Economy to Keep L.A. Humming

By MARY FUNK, President, and David Walker SRAR

Unlike other Southern California communities, Los Angeles County's economy is strong enough to avoid a recession and will continue to add jobs, assuming there is no further labor unrest in the entertainment sector.

Despite the slowdown in home building, the Santa Clarita/Valencia region showed the second strongest performance in job growth during 2007.

Pummeled by multiple forces, the California economy is "on the brink of recession" with some parts of the state already in recession, the Los Angeles County Economic Development Corp. and the Kyser Center for Economic Research state on Wednesday.

"The housing market crash, problems in the financial sector, and soaring prices for gasoline and diesel have severely hammered the state and local economies," said Jack Kyser, LAEDC chief economist and senior vice presenting. "They are on the brink of falling into a recession."

However, the study noted that some regions are relatively strong while others are hit harder.

Among the bright spots, San Francisco and San Jose are experiencing relatively low economic discomfort, L.A. is relatively secure, while Orange County and Riverside-San Bernardino are suffering due to the steep fall off in new home building and softness in international trade.

"The period 2007 through 2009 will be quite challenging for Southern California, and there will be more bad news," Kyser said. "However, the region has some industry sectors that are still growing, such as international tourism, technology, healthcare, and private education. Moreover, it has a large and growing population and business base and is a magnet for foreign investment."

While long-term population growth is still projected, new home building in Southern California will decline further in 2008, reflecting oversupply of existing units and difficulty in finding financing for builders and home buyers.

"Foreclosures will continue to rise," the report stated, "but buyers are moving in to take advantage of bargains."

In a ground-breaking report also issued last week, the LAEDC said foreign direct investment in Los Angeles County generated 359,000 direct and indirect jobs - 9.9 percent of all private sector jobs - and $1 billion in sales and personal income taxes.

"The Los Angeles region is largely known for its entertainment industry," said Vance Baugham, president of the World Trade Center Association Los Angeles-Long Beach, a subsidiary of LAEDC. "The Foreign Direct Investment Report showcases the numerous other types of industries and businesses that drive the L.A. County economy."

For more information about LAEDC and additional findings from both economic forecasts, visit www.laedc.org.