[vc_row full_width=”stretch_row” content_placement=”middle” bg_type=”image” bg_image_new=”3948″ enable_overlay=”enable_overlay_value” overlay_color=”rgba(0,91,125,0.6)” seperator_enable=”off”][vc_column][boc_spacing height=”60px”][boc_heading html_element=”p” color=”#ffffff” subheading=”yes” margin_bottom=”5px” css_classes=”.boc_subheading”]Fall 2022[/boc_heading][boc_heading color=”#ffffff” font_size=”42″]Los Angeles[/boc_heading][boc_divider divider_width=”100px” divider_color=”#eeeeee”][boc_heading html_element=”h3″ color=”#ffffff” margin_bottom=”0px” css_classes=”.boc_subheading”]Presented by Beacon Economics[/boc_heading][boc_spacing height=”60px”][/vc_column][/vc_row][emaillocker][vc_row el_id=”#lajobgrowth”][vc_column][vc_row_inner][vc_column_inner][vc_column_text]Welcome to The Regional Outlook, a forecast for five of the state’s largest metropolitan economies. Each quarter, find updated analysis that goes beyond the state and national level to present a snapshot of employment, home prices, consumer spending, personal income, and other leading economic indicators within key areas of the state. Visit your region of interest and subscribe for email delivery.[/vc_column_text][/vc_column_inner][/vc_row_inner][boc_divider divider_color=”#eeeeee” margin_top=”4px”][/vc_column][/vc_row][vc_row][vc_column][boc_heading html_element=”h3″ color=”#003066″]LA Recovery Slower Than Other Regions[/boc_heading][vc_row_inner][vc_column_inner width=”1/3″][vc_column_text]The economic outlook for the County of Los Angeles has continued to improve, although the recovery has been much slower compared to neighboring regions. Total nonfarm employment increased 3.1% in the twelve-month period ending in August 2022, slower than the 4% statewide increase. Employment growth has continued to moderate as the region comes closer to regaining jobs lost to the pandemic. That said, Los Angeles is running out of available workers to fill open positions. Since the beginning of the year, nonfarm employment has increased 1.9%, compared to 7.8% during the same period a year earlier.

Labor shortages could further limit job increases locally as the pool of workers Los Angeles draws from tends to extend to the Inland Empire and Orange County. The unemployment rate for the entire region fell below 5% in March of this year, approaching pre-pandemic levels (i.e. close to the lower bound of what’s typical for the region). In fact, since February 2020, the labor force in Los Angeles County alone has contracted by 3.2% or nearly 170,000 jobs.[/vc_column_text][/vc_column_inner][vc_column_inner width=”2/3″][vc_single_image image=”8478″][/vc_column_inner][/vc_row_inner][vc_row_inner][vc_column_inner width=”1/3″][vc_column_text]Clearly, Los Angeles has not recovered from the impact of the pandemic. And while it’s impossible to tell how the county would have fared had there not been a pandemic, we can get an idea by applying a trend to the historical data. According to this, it’s estimated that the economy would’ve had at least 100,000 to 144,000 more jobs by this point.

As for consumption, taxable sales have rebounded substantially over trend. However, there was a marked drop-off in spending stemming from lockdowns and public health mandates. The same exercise can be repeated to project the trend from 2020 onward, comparing the cumulative sum of taxable sales over the six-quarter period ending in the second quarter of 2022 (the latest data available). Estimates suggest that, cumulatively, taxable sales are roughly where they would have been had the pandemic not occurred. In other words, the subsequent surge in taxable sales represents delayed consumption rather than new spending.[/vc_column_text][/vc_column_inner][vc_column_inner width=”2/3″][vc_single_image image=”8480″][/vc_column_inner][/vc_row_inner][boc_heading html_element=”h3″ color=”#003066″]Los Angeles Employment Outlook [/boc_heading][vc_row_inner][vc_column_inner width=”1/3″][vc_column_text]Given the latest employment figures, Beacon Economics expects Los Angeles’ employment recovery to continue into next year, although the extent to which nonfarm employment can grow will be limited by an increasingly short supply of available labor. Beacon Economics also projects a moderate rise in the unemployment rate toward the end of the year as measures taken by the Federal Reserve begin to cool things down. A recession is not currently predicted, but storm clouds are beginning to gather. As noted in Beacon Economics’ national outlook, somewhere out there is a reckoning, but exactly when remains unclear.[/vc_column_text][/vc_column_inner][vc_column_inner width=”2/3″][vc_single_image image=”8493″][/vc_column_inner][/vc_row_inner][boc_heading html_element=”h3″ color=”#003066″]Los Angeles Housing Outlook [/boc_heading][vc_row_inner][vc_column_inner width=”1/3″][vc_column_text]The housing market has continued to show signs of weakness, although there is a big difference between a housing pause and a housing bust. Currently, Beacon Economics does not have a housing correction in its forecast. Weakness in the housing market stems from a slowdown in sales activity. The primary driver of the slowdown was (and has been) rising interest rates. Even after accounting for local inflation, the real cost of owning a home in the Los Angeles metro area has risen 25% since the start of this year. Meanwhile, inflation-adjusted average hourly earnings for private-sector workers have fallen by 2%.

The impact of rising rates is readily apparent in sales activity. Home sales in the Los Angeles County were down significantly across major segments of the market. Sales of existing single-family homes, which comprise the lion’s share of the local market, were down 12.1% through the first half of this year, whereas prices increased 10.6% over the same period. Steep declines in sales also occurred in the existing condos market, where year-to-date sales dipped 14%, while sales of new homes fell 19.3%.[/vc_column_text][/vc_column_inner][vc_column_inner width=”2/3″][vc_single_image image=”8479″][/vc_column_inner][/vc_row_inner][vc_column_text]A market response to changes in interest rates is normal; prices need to adjust to a higher carrying cost. Once that happens, the market should get back on track. The slowing pace of sales is part of that process. However, Beacon Economics expects nominal prices in Los Angeles to trend sideways into next year. High(er) frequency data from Redfin and the California Association of Realtors suggests home prices peaked in late April or early May and have since come down. It’s within the realm of possibility that prices could move in either direction, but Beacon Economics’ current forecast calls for home prices to stall out until interest rates begin to decline again, something that seems unlikely given that rates are at a 15-year high and the pandemic ushered in a wave of refinancing.[/vc_column_text][/vc_column][/vc_row][vc_row full_width=”stretch_row” equal_height=”yes” content_placement=”top” bg_type=”bg_color” bg_color_value=”#0f6cb6″ css=”.vc_custom_1531416343727{margin-bottom: 0px !important;padding-top: 20px !important;padding-bottom: 20px !important;}” el_id=”moreinformation”][vc_column width=”1/4″][vc_column_text el_class=”whitetext”]

More Information

[/vc_column_text][/vc_column][vc_column width=”1/2″][vc_column_text el_class=”whitetext”]For information about any of the Center’s research services, please contact:

Business Development Manager Daniel Fowler at 424-666-2165 or [email protected].[/vc_column_text][/vc_column][vc_column width=”1/4″][boc_button btn_content=”Contact Daniel Fowler” target="_blank" href=”mailto:[email protected]” color=”btn_yellow”][/vc_column][/vc_row][vc_column][/vc_column][/emaillocker]