Oct. 29–UNIVERSAL CITY — The Los Angeles area’s economy is in recovery mode — it just doesn’t feel like it yet, a panel of economists concluded Friday at a business forecast conference.
And it might take until next year before things perk up.
“We are now in a true expansion. We are building our economy,” John Blank, deputy chief economist at the Kyser Center for Economic Research told about 300 people at the 23rd annual Valley Industry and Commerce Association’s Business Forecast Conference at the Universal Hilton Hotel. This year’s event was co-sponsored by the Valley Economic Alliance.
“We are still losing manufacturing jobs to China but we are gaining jobs in the(informationtechnology) sector,” he said.
Blank and economists William W. Roberts and Gary Schlossberg said the local and national economies should grow by between 2.5 percent and 3 percent over the next year.
And while the unemployment rate has been stuck at 12 percent or higher in Los Angeles County and the state, some encouraging signs are emerging.
Of the 11 employment sectors, eight added jobs last month, while construction and government stabilized and banking lost ground, Blank noted.
“We have turned around construction employment. It’s good news and it’s happening outside the non-residential sector,” he said.
And venture capital continues to flow into California, another indication that the Golden State is regaining some of its lost economic luster. Last year 50 percent of the nation’s venture capital ended up in California, Blank said.
That is why California is a high-cost state for businesses, he said. But that is not necessarily a bad thing, because the tech sector has high-paying jobs.
“You are a high-cost state. That’s your success.”
Blank also cautioned against pessimism.
“If you don’t think this economy can turn around you have to believe that the nation’s economy won’t either.”
However, Roberts, director of the San Fernando Valley Economic Research Center at Cal State Northridge, did sound a morose note.
The Great Recession has actually lasted for 36 months here versus one year for the other 10 recessions after 1945 and we are still in for a long slog, Roberts said.
“We’re kind of at the bottom and we’re going to stay there for quite a while. I’m much less optimistic than I have been in the past,” he said. “I’m looking at 12 months of a long dismal (economic) winter.”
While there is an influx of venture capital, the Valley is still missing a key part of its economic engine — small business start ups, Roberts said.
That’s because of the heavy hit the housing market took and the big drop in home values.
During the recession in the early 1990s housing values also fell but did so over six years. People who lost jobs could get a loan or use the equity in their homes to start a small business. But in this recession there was a steep price slide in just 22 months, Roberts said.
Schlossberg, an economist at Wells Capital Management, said the economy here and nationally is still dealing with the aftershocks of the housing market collapse and global competition and financial distress in Europe.
But order is being restored.
“Keep in mind that we’ve been the least ugly kid on the block,” he said.