Shannon Sedgwick Director, LAEDC Institute for Applied Economics - - PowerPoint PPT Presentation

Shannon Sedgwick

Director, LAEDC Institute for Applied Economics (IAE)

Shannon Sedgwick

Top-line 2020 Forecast California, Southern CA & LA County

4.3% 3.7% 3.1% 2.6% 1.6% 1.9% 2.0% 1.8% 1.8% 1.6% 1.6% 1.8%

California Los Angeles County Southern CA

Real GDP Growth Forecast

2018 2019 2020f 2021f

Sources: IHS, Forecast by LAEDC

Slower, yet Continued Growth

Economic Growth in California

Unemployment Rate

4.2% 4.7% 4.2% 4.1% 4.5% 4.1% 4.0% 4.3% 4.0% 3.9% 4.1% 3.9%

California LA County Southern CA

2018 2019 2020f 2021f

Real Personal Income Growth

3.8% 2.8% 3.5% 3.6% 2.8% 3.2% 2.2% 1.8% 2.4% 2.2% 2.1% 2.5%

California LA County Southern CA

2018 2019 2020f 2021f

Sources: BLS, BEA, Forecast by LAEDC

The Labor Market will be Eliminating the Last of its Slack

Sources: IHS

• 100

100 200 300 400 500 600 700 800

Manufacturing Financial Activities Other Services Information Government Construction & Natural Resources Transp., Trade, & Utilities Leisure & Hospitality Professional & Business Svcs Educational & Health Svcs

Thousands

10 Year Employment Change Los Angeles Other Southern CA Rest of California

California Historical Employment Growth

Sources: IHS, Forecast by LAEDC

• 50

50 100 150 200 Financial Activities Other Services Information Manufacturing Transp., Trade, & Utilities Construction & Natural Resources Government Leisure & Hospitality Professional & Business Svcs Educational & Health Svcs

Thousands

2 Year Employment Forecast Los Angeles Other Southern CA Rest of CA

California Employment Forecast

Population Trends Low Fertility

• 0.01%

0.5%

• 0.5%

0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 Year-over-Year % Change In Population

Los Angeles California

1.72%

2.20% 1.63%

1.6 1.7 1.8 1.9 2.0 2.1 2.2 2.3 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 Total Fertility Rate

United States California

Barrier to Growth: Demographic Headwinds

Barrier to Growth: Demographic Headwinds

Outmigration Low Labor Force Productivity

2018

• 190.1
• 1000
• 800
• 600
• 400
• 200

200 400 600 2001 2003 2005 2007 2009 2011 2013 2015 2017 Thousands

California Domestic Migration

Coming Going Net 1.3%

• 1%

0% 1% 2% 3% 4% 5% 1988 1991 1994 1997 2000 2003 2006 2009 2012 2015 2018

U.S. Labor Force Productivity % Growth (Year-Over-Year)

Barrier to Growth: The Housing Crisis Housing Undersupply

Source: US Census Bureau

116.0 22.0 45.9 50 100 150 200 250 1990 1994 1998 2002 2006 2010 2014 2018 Thousands

Total Housing Permits Issued

California Los Angeles SCAG SCAG Region RHNA Target: 1.3 million over 8 years

Barrier to Growth: The Housing Crisis

Housing Affordability, Traditional (HAI) SoCal Apartment Rents

31% 25% 0% 10% 20% 30% 40% 50% 60% 2006.1 2007.3 2009.1 2010.3 2012.1 2013.3 2015.1 2016.3 2018.1 2019.3 CA LA Minimum Qualifying Income LA County Q3 2019

$127,200

$2,614 $1,915 $2,548 $2,612

$500 $1,000 $1,500 $2,000 $2,500 $3,000 2010-09 2011-09 2012-09 2013-09 2014-09 2015-09 2016-09 2017-09 2018-09 2019-09 LA/OC Inland Empire San Diego Ventura

Estimated Annual Rent in L.A. County (2018): ~$31,000 Median HH Income in Los Angeles County (2018): $68,093

Upside Economic Potential California Venture Capital Investment

Source: PwC

5 10 15 20 25 30 Q1 1995 Q1 1997 Q1 1999 Q1 2001 Q1 2003 Q1 2005 Q1 2007 Q1 2009 Q1 2011 Q1 2013 Q1 2015 Q1 2017 Q1 2019 100 200 300 400 500 600 700 800 900 1000 $US Billions Number of Deals

Venture Capital Investment

Los Angeles California Number of deals

$6.0 $6.0 $14.3 $2.5 $23.8 $1.0 $2.5 $15.0 5 10 15 20 25 Amazon (2019) Apple (2019) AT&T (including HBO) (2018) HBO (2017) Disney (Non- Sports) (2019) Disney+ (2019) Hulu (2018) Netflix (2019)

Content Investment ($billions)

Upside Economic Potential Streaming Content Investment

$6.6

1 2 3 4 5 6 7 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Billions

LA Metro Budget

Upside Economic Potential Regional Transit Expansion

Source: LA Metro

Conclusions from the 2020 LAEDC Forecast

▪Still more slack in the labor market, particularly in Los Angeles County ▪Low to moderate but sustained economic growth in the near term ▪Employment expansion, particularly in health care ▪Barriers To Growth: ▪Demographic Headwinds ▪Housing Crisis ▪Potential for Greater Growth: ▪Business investment, particularly in the digital and traditional media ecosystem ▪Transit expansion, both direct fiscal stimulus and helping to connect labor market

The Other Los Angeles

10.2 8.5 7.0

4.8 4.1 3.6

5 10 15 20 25 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 U6 Unemployment,

4-Quarter Moving Average

Los Angeles California United States Los Angeles California United States U3 Unemployment

The Labor Market Isn’t as Tight as You Think

Unemployment Rates: Including Underemployed and Detached Workers

Source: BLS

Household Income Has Seen Little Growth Indexed Growth from 2000 to 2018

104.3

80 85 90 95 100 105 110 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Los Angeles County (2000=100)

Median Household Income ($2000)

Real Median Household Income only increased by: 4 percent

Home Prices Far Exceed Household Incomes

Median Home Price to Median Household Income Ratio

Source: US Census ACS

5.7 9.2 4.9 7.3 3.0 3.7

0.0 2.0 4.0 6.0 8.0 10.0 12.0 14.0 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018

Los Angeles California United States

The median home value in Los Angeles was 9.2 times the median household income in 2018

Extremely Low Income Households Increasing

Percent of households whose incomes do not exceed 30% of the median family income

In 2013: 18.3% In 2016: 20.6%

Source: USC

The Number of Homeless are Increasing

In Los Angeles County

44,359 46,874 55,048 52,765 58,936

2015 2016 2017 2018 2019

Homeless Count

Raising Children in LA County is Harder

Households with Children Have Higher Poverty Rates

5.0% 5.4% 6.6% 16.7% 16.7% 19.6%

United States California LA County

Poverty Rate: Households

Households - no Children Households - w/ Children

• 25% of HH with children

receiving public assistance

• 456,430 children living below

poverty level

• 5,214 children in homeless

families

Inequity Persists in Education

78.0% 82.5% 86.1% 95.3% 98.1%

Los Angeles Unified Antelope Valley Union High LA County Total San Marino Unified Palos Verdes Penn Unified

2018-2019 Graduation Rates

Job Growth Strongest for Those with More Education

Educational Attainment of SoCal Residents Projected Job Growth by Entry-Level Education in SoCal

9.6% 7.7% 7.1% 7.1% 7.0% 6.5% 6.2% 5.3% 6.6% Master's degree Associate degree Postsecondary non-degree award PhD/ professional degree Bachelor's degree High school diploma or equivalent Less than high school Some college, no degree Total, all levels of education

Percentage change from 2018 to 2023

Source: LAEDC

Some College/ Nondegree Award 18.1% Associate 7.5% Bachelor's 20.4% Master's 7.3% PhD/Prof'l 3.5% Less than HS 19.1% High School or equiv 21.3%

Population 25 years and over in 2017

4.4 2.9 1 2 3 4 5 6 7 1998 2001 2004 2007 2010 2013 2016 2019

US Wage Growth by Wage Quartile

Lowest 25% of wages Top 25% of wages

Wage Growth Rebounding for Those with The Lowest Wages

Source: Atlanta Fed

The lowest quartile is growing:

• took longer to

rebound post- recession

• Min Wage

increases are causing growth

• Inequity remains

and they are still far behind

Growing Jobs Reflect the Bifurcation of Our Workforce

Occupations with the most jobs added 2009 to 2018

1. Combined Food Preparation and Serving Workers, Including Fast Food – 54,530 jobs added 2. Administrative Assistants, Except Legal, Medical, and Executive – 51,220 jobs added 3. Laborers and Freight, Stock, and Material Movers, Hand – 42,980 jobs added 4. Software Developers, Applications – 29,890 jobs added 5. Cooks, Restaurant – 25,200 jobs added

Growing Jobs Reflect the Bifurcation of Our Workforce

Occupations with the most jobs added 2009 to 2018

6. Computer User Support Specialists – 23,640 jobs added 7. Software Developers, Systems Software – 23,300 jobs added 8. Cashiers – 20,240 jobs added 9. Computer Systems Analysts – 19,080 jobs added 10. Waiters and Waitresses – 17,580 jobs added

LA County’s Working Poor

Individuals Below the Poverty Level: Working Full-time, Year-Round:

32,100

Working Part-Time, Year-Round:

150,130

Job Growth Reflect the Bifurcation of Our Workforce

Occupations with the most jobs added 2009 to 2018

$24,320 $42,250 $27,850 $113,670 $28,540 $56,120 $124,480 $24,670 $93,960 $25,030 $0 $20,000 $40,000 $60,000 $80,000 $100,000 $120,000 $140,000 Food Preparation/ Serving Workers Administrative Assistants Laborers & Frght/Stock/ Mat'l Movers, Hand Software Developers, Apps Cooks, Restaurant Computer User Support Specialists Software Developers, Systems Cashiers Computer Systems Analysts Waiters/ Waitresses

Median Wages of Occupations Adding the Most Jobs, 2009 to 2018

Los Angeles County Median Wage: $40,970 Living Wage (1-person) $29,870

Despite All of These Challenges

LA County Will See

• Slow, but continued positive GDP growth
• Official unemployment rate will continue to decline
• Small gains made in personal income
• Employment gains in

– Education and health care, – Professional services, – Tourism-related industries and – Construction

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