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Pasadena Chamber of Commerce. Regional Economic Outlook Kimberly Ritter-Martinez, Economist LAEDC Kyser Center for Economic Research October 23, 2014. Outline. U.S. Economy California Economy Los Angeles and the San Gabriel Valley Five-Year Outlook Conclusion. The U.S. Economy. - PowerPoint PPT Presentation
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Pasadena Chamber of Commerce
Regional Economic OutlookKimberly Ritter-Martinez, EconomistLAEDC Kyser Center for Economic ResearchOctober 23, 2014
U.S. Economy
California Economy
Los Angeles and the San Gabriel Valley
Five-Year Outlook
Conclusion
Outline
The U.S. Economy
U.S. Economic Growth
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014f 2015f
3.83.3
2.7
1.8
-0.3
-2.8
2.5
1.6
2.3 2.2 2.22.9
Sources: Bureau of Economic Analysis, forecasts by LAEDC
Annual % Change
Kyser Center for Economic Research
Key Sectors of Macroeconomy
Consumer Sector
Business Sector
Government
International Trade
• Labor Market• Inflation
Other Macro Indicators:
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013-3
-2
-1
0
1
2
3
4
5
6
7
2.4
U.S. Personal Consumption
Source: Bureau of Economic Analysis
Annual % Change
Kyser Center for Economic Research
Equipment Intellectual Property Structures-2%
0%
2%
4%
6%
8%
10%
4.6%
3.4%
-0.5%
6.5%
3.9%
7.4%7.5%
5.1%
1.1%
2013 2014 2015
Annual Percentage Change
Business Investment Spending
Source: IHS, LAEDC
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014f
2015f
10
12
14
16
18
20
22
24
26Receipts Outlays
Federal Budget Receipts & Outlays as Percentage of GDP
Source: Office of Management & Budget Kyser Center for Economic Research
Global Economic Outlook
World Euro Area Developing Asia
Latin America/Carb.
Japan-2
0
2
4
6
8
10
122012 2013 2014F 2015F
Annual % Growth
Source: IMF World Economic Outlook, July 2014 Update Kyser Center for Economic Research
U.S. Labor Market in Expansion Phase
0 4 8 12 16 20 24 28 32 36 40 44 48 52 56 60 64 68 72 76 80 8492
94
96
98
100
102
104
100.5
11/1973 – 3/1975
7/1981 – 11/1982
7/1990 - 3/19913/2001 – 11/2001
1/1980 – 7/1980
Source: Bureau of Labor Statistics
12/2007 – 6/2009
Months
Jan-9
0
Jan-9
1
Jan-9
2
Jan-9
3
Jan-9
4
Jan-9
5
Jan-9
6
Jan-9
7
Jan-9
8
Jan-9
9
Jan-0
0
Jan-0
1
Jan-0
2
Jan-0
3
Jan-0
4
Jan-0
5
Jan-0
6
Jan-0
7
Jan-0
8
Jan-0
9
Jan-1
0
Jan-1
1
Jan-1
2
Jan-1
3
Jan-1
40%
5%
10%
15%
U.S. Average 1990-Now
U-Rate ApproachingNatural Rate (mid-5%)
Source: US Bureau of Labor Statistics Kyser Center for Economic Research
Seasonally Adjusted, Sept 2014: 5.9%
Source: US Bureau of Labor StatisticsKyser Center for Economic Research
U.S. Nonfarm Job Growth SteadyMTM changes in thousands, Seasonally Adjusted
Jan
-08
Ap
r-0
8
Jul-0
8
Oct
-08
Jan
-09
Ap
r-0
9
Jul-0
9
Oct
-09
Jan
-10
Ap
r-1
0
Jul-1
0
Oct
-10
Jan
-11
Ap
r-1
1
Jul-1
1
Oct
-11
Jan
-12
Ap
r-1
2
Jul-1
2
Oct
-12
Jan
-13
Ap
r-1
3
Jul-1
3
Oct
-13
Jan
-14
Ap
r-1
4
Jul-1
4
-1,000
-800
-600
-400
-200
0
200
400
600
MTM Job Changes3 per. Moving Avg. (MTM)
Quantitative Easing (QE)
Short Term Rates in second half of 2015
Q: When Will Fed Raise Rates?
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 201440%
45%
50%
55%
60%
65%
70%
Source: Bureau of Labor Statistics
Declining Labor Force Participation Rate - - Structural or Cyclical?
Earliest Boomers Hit 65 Yrs in 2011!
Kyser Center for Economic Research
19
68
19
70
19
72
19
74
19
76
19
78
19
80
19
82
19
84
19
86
19
88
19
90
19
92
19
94
19
96
19
98
20
00
20
02
20
04
20
06
20
08
20
10
20
12
20
14
10%
11%
12%
13%
14%
15%
16%
17%
18%
19%
20%Part Time % Ave 1990-Now
Source: Bureau of Labor Statistics
High % of Part-Time Employment:Structural or Cyclical?
Kyser Center for Economic Research
2007 2008 2009 2010 2011 2012 2013 2014-0.5%
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
4.0%
Annual % Change in Hourly Wage Annual Inflation Rate
Source: Bureau of Labor Statistics
Wage Gains vs. Inflation
Kyser Center for Economic Research
Fed to end Quantitative Easing (QE) soon
Fed to raise short term rates in second half of 2015
Concern about Fed getting ‘ahead of the curve’ and ability to react to future events
Q: When Will Fed Raise Rates?
Forecast Source: LAEDC Kyser Center for Economic Research
U.S. Economy to Accelerate in 2015
2011 2012 2013 2014e 2015f
GDP - Annual % Chg. 1.6% 2.3% 2.2% 2.2% 2.9%
Nonfarm Jobs - Annual % Chg.
1.2% 1.7% 1.7% 1.8% 1.8%
Unemployment Rate 8.9% 8.1% 7.4% 6.3% 5.8%
Consumer Prices - Annual % Chg.
3.2% 2.1% 1.5% 1.9% 2.2%
The State and Local Economies
Kyser Center for Economic Research
Economic Comparisons 2013 GDP
Los Angeles County
21th Largest Economy $583.1 Billion GDP
Southern California
16th Largest Economy $948.2 Billion GDP
California8th Largest Economy $2.2 Trillion GDP
USA
Largest Economy in the World $16.8 Trillion GDP
Source: BLS, LAEDC estimates
Moved up from 9th place!
Jan-9
0
Jan-9
1
Jan-9
2
Jan-9
3
Jan-9
4
Jan-9
5
Jan-9
6
Jan-9
7
Jan-9
8
Jan-9
9
Jan-0
0
Jan-0
1
Jan-0
2
Jan-0
3
Jan-0
4
Jan-0
5
Jan-0
6
Jan-0
7
Jan-0
8
Jan-0
9
Jan-1
0
Jan-1
1
Jan-1
2
Jan-1
3
Jan-1
40%
5%
10%
15%
U.S. CA
California U-Rate Falling Quickly…
Source: US BLS, CA EDD Kyser Center for Economic Research
Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14-7%
-6%
-5%
-4%
-3%
-2%
-1%
0%
1%
2%
3%
4%
US CA
…and Adding Jobs Faster than U.S.
Source: US BLS, CA EDD Kyser Center for Economic Research
Source: CA EDD, Labor Market Information Division
Job Trends by California Metro Area
ModestoSacramentoLos Angeles
VenturaOrange CountyStockton MSA
BakersfieldOakland
Riverside-San BernardinoSan Diego
Fresno MSASan Jose
San Francisco
0% 1% 2% 3% 4%
1.3%1.4%
1.5%1.6%
1.8%1.9%
2.0%2.1%2.1%
2.4%2.9%
3.2%3.5%
Annual percent change in nonfarm jobs
Sept. 2014: +297,000, +1.9% YTY
Source: CA EDD, Labor Market Information Division Kyser Center for Economic Research
Job Trends by Industry – CA
Nondurable Goods Finance & Insurance
Government Wholesale Trade
Durable Goods Retail Trade
Transportation, Warehousing & Utilities Real Estate & Rental & Leasing
Leisure & Hospitality Educational Services
Health Care & Social Assistance Management of Companies & Enterprises
Professional, Scientific & Technical Services Information
Administrative & Support & Waste Services Construction
-4% -2% 0% 2% 4% 6% 8%
-2.7%-2.2%
-0.1%1.0%1.2%1.3%
1.6%2.2%2.3%2.4%
3.0%3.6%
3.9%4.9%5.0%
6.0%
Sept. 2014: +297,000, +1.9% YTY
Annual percent change in nonfarm jobs
Forecast Source: LAEDC Kyser Center for Economic Research
California – Steady Progress
2011 2012 2013 2014e 2015f
Nonfarm Jobs - annual % chg.
1.0% 2.4% 3.0% 2.2% 2.2%
Unemployment Rate 11.8% 10.4% 8.9% 7.5% 7.0%
Personal Income - annual % chg.
6.6% 5.0% 2.8% 4.4% 5.1%
Total Taxable Sales - % chg.
9.1% 7.3% 5.1% 5.0% 5.2%
Housing Permits - thousands of units
41.1 57.6 82.3 86.4 110.6
Jan-0
0
Aug-00
Mar-0
1
Oct
-01
May-
02
Dec-02
Jul-0
3
Feb-04
Sep-04
Apr-05
Nov-05
Jun-0
6
Jan-0
7
Aug-07
Mar-0
8
Oct
-08
May-
09
Dec-09
Jul-1
0
Feb-11
Sep-11
Apr-12
Nov-12
Jun-1
3
Jan-1
4
Aug-14
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
16.0%
Los Angeles County (8.0%) Orange County (5.1%) Inland Empire (8.2%)Ventura County (6.4%) San Diego County (5.9%)
Local Unemployment Rates
Source: CA EDD, Labor Market Information Division, NSA
September 2014
Nondurable Goods Mfg.Durable Goods Mfg.
Wholesale TradeFinance & Insurance
GovernmentEducation
Transp't, Warehsg & UtilitiesLeisure & Hospitality
Retail TradeHealth Care & Social Assistance
Real Estate, Rental & LeasingInformation
Prof., Sci. & Technical ServicesMgmt. Companies & Enterprises
Admin. Support & Waste ServicesMining & Logging
Construction
-7.1%-2.2%
-1.4%-1.0%
0.0%1.2%1.3%
2.1%2.6%2.6%
3.5%4.2%4.6%
5.8%5.9%
6.4%8.6%
Kyser Center for Economic Research
Job Trends by Industry – Los AngelesYTY % change in nonfarm employment
Source: CA EDD, Labor Market Information Division
Sept. 2014: +73,800 jobs, +1.8% YTY
Kyser Center for Economic Research
Job Trends by Industry – San Gabriel Valley
Other Services
Natural Resources & Mining
Financial Activities
Information
Construction
Transporation & Utilities
Government
Wholesale Trade
Retail Trade
Manufacturing
Professional & Business Services
Leisure & Hospitality
Education & Health Services
-18.39
0.09
0.39
0.52
0.73
0.78
1.43
2.53
3.93
4.26
4.92
5.09
30.02
2012-2013 change in nonfarm employment, Thousands
Source: CA EDD, Labor Market Information Division
35,622 jobs | 5.9%
2006 2007 2008 2009 2010 2011 2012 2013 200.0
300.0
400.0
500.0
600.0
700.0
800.0
647 645 650613 597 599 609
644
San Gabriel Valley Employment TrendsAnnual average employment, thousands
Sources: California EDD., LMID ES202 data
Average Annual Wage by Region, 2013
Source: California EDD., LMID, ES202 data
South LAAntelope Valley
East LANorth Gateway
Santa ClaritaSan Gabriel Valley
Long Beach/LakewoodWest San Fernando Valley
Crenshaw/Mid-City/HollywoodEast San Fernando Valley
South Bay/LAXCentral/Downtown LA
Westside
Los Angeles County
$33,381$39,871
$42,573$43,031$43,143$45,340
$48,719$52,537$53,598$54,596
$59,673$73,845
$77,269
$53,719
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012e2013f-15%
-10%
-5%
0%
5%
10%
15%
$0
$2
$4
$6
$8
$10
$12
$14
$16
$18
$20Taxable Retail Sales ($millions) Annual % Change
San Gabriel Valley Taxable Retail Sales
Source: California State Board of Equalization (2001-11), LAEDC (2012-13)
Annual % change $Millions
Trade Entertainment Business Services Private Education Institutions Aerospace & Analytical Instruments Fashion & Apparel Manufacturing Hospitality Local Serving: Retail, Medical
Kyser Center for Economic Research
Major Industries in Southern California
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014f
11.813.1
14.2
15.8 15.714.3
11.8
14.1 14 14.1 14.615.4
Millions of TEUs
Container Throughput San Pedro Bay Ports
Sources: Ports of Los Angeles and Long Beach; forecast by LAEDC Kyser Center for Economic Research
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
20
14
Y
TD
0
200,000
400,000
600,000
800,000
1,000,000
1,200,000Durable Goods Nondurable Goods
Southern California Manufacturing Employment
Source: California EDD Kyser Center for Economic Research
Manufacturing Trends
•Machinery Mfg•Furniture•Miscellaneous
Durable GoodsAdding Jobs:
•Petro-Chemical•Food•Aerospace•Electronics•Apparel/Textiles
Losing Jobs:
Kyser Center for Economic Research
Source: US Bureau of Economic Analysis; IHS Kyser Center for Economic Research
Value of Manufacturing Output, California
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
0
50
100
150
200
250
300Durable Goods Nondurable Goods
$ Billions (in 2009 Dollars)
Kyser Center for Economic Research
Jan-06Feb-06Mar-06Apr-06May-06Jun-06Jul-06Aug-06Sep-06Oct-06Nov-06Dec-06Jan-07Feb-07Mar-07Apr-07May-07Jun-07Jul-07Aug-07Sep-07Oct-07Nov-07Dec-07Jan-08Feb-08Mar-08Apr-08May-08Jun-08Jul-08Aug-08Sep-08Oct-08Nov-08Dec-08Jan-09Feb-09Mar-09Apr-09May-09Jun-09Jul-09Aug-09Sep-09Oct-09Nov-09Dec-09Jan-10Feb-10Mar-10Apr-10May-10Jun-10Jul-10Aug-10Sep-10Oct-10Nov-10Dec-10Jan-11Feb-11Mar-11Apr-11May-11Jun-11Jul-11Aug-11Sep-11Oct-11Nov-11Dec-11Jan-12Feb-12Mar-12Apr-12May-12Jun-12Jul-12Aug-12Sep-12Oct-12Nov-12Dec-12Jan-13Feb-13Mar-13Apr-13May-13Jun-13Jul-13Aug-13Sep-13Oct-13Nov-13Dec-13Jan-14Feb-14Mar-14Apr-14May-14Jun-14Jul-14Aug-140
2,000
4,000
6,000
8,000
10,000
12,000
$0
$100
$200
$300
$400
$500
$600
Home Sales
Median Home Price
Home Sales & Median Prices L.A. County New and existing, single-family homes and condos
Sales Price, Thousands
Source: California Real Estate Research Council; DataQuick
Residential Building Permits Issued in Los Angeles County
'03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14f '15f0
5
10
15
20
25
30
10 12 12 108
3 2 2 2 4 4 5 5
11
15 14 16
13
10
3 58
913
1416
Multi-FamilySingle-Family
Permits issued, thousands
Source: CIRB, California Home Building Foundation, forecast by LAEDC Kyser Center for Economic Research
Residential Building Permits Issued inSan Gabriel Valley
Source: CIRB, California Home Building Foundation, forecast by LAEDC
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 YTD
0
500
1,000
1,500
2,000
2,500
3,000
3,500
1293 1360 1395 1267 1319 1195
557329 354
586 533 647 688
893
1765
754 1015666 1059
1527
270 219254 334
11481492
Single-Family Multi-Family
Permitted housing units
21.4%
U.S. Five-Year Forecast
Forecast Source: IHS, LAEDC Kyser Center for Economic Research
2009-2009 2010-2014 2015-2019
GDP – Annual % Change 0.9% 2.2% 2.8%
Nonfarm Jobs Annual % Change
-0.1% 1.1% 1.3%
Unemployment Rate 5.9% 8.0% 5.3%
Consumer Prices Annual % Change
2.6% 2.0% 1.8%
California Five-Year Forecast
Forecast Source: IHS, LAEDC Kyser Center for Economic Research
2009-2009 2010-2014 2015-2019
GSP – Annual % Change 0.9% 2.1% 3.1%
Nonfarm Jobs Annual % Change
-0.4% 1.5% 1.6%
Unemployment Rate 6.9% 10.2% 6.6%
Personal IncomeAnnual % Change
3.1% 4.3% 5.5%
Forecast Source: IHS, LAEDC Kyser Center for Economic Research
Annual Average
2005-2009 2010-2014 2015-19
U.S. Housing Starts(Millions)
1,336 787 1,494
California Housing Permits(Thousands)
117.5 63.6 142.5
New Home Construction to Drive Growth
Forecast Source: LAEDC Kyser Center for Economic Research
Job Gains Continue
Kyser Center for Economic Research
Nonfarm Jobs in Millions % Yr % Yr
2009 2014 2019 09-14 14-19
Los Angeles 3.95 4.19 4.45 1.2% 1.2%
Orange 1.38 1.48 1.63 1.4% 1.8%
Riverside-San Bernardino
1.16 1.26 1.43 1.6% 2.6%
Ventura 0.28 0.29 0.32 1.0% 1.7%
CA Population Changes 2014-24
20%
29%20%
23%
9%
Post-Millenial Millenials Gen X
Boomers Pre-Boomer
Kyser Center for Economic Research
33%
28%
18%
17%
5%
Post-Millenial Millenials Gen X
Boomers Pre-Boomer
2014 2024
Entitlement Programs
Employment/Workforce Needs
Housing Market
Market Opportunities
Implications For…
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