Slow Recovery in Store for California

The economy is only going to get better next year in California and Los Angeles. But growth will be slow and measured.

The Los Angeles County Economic Development Corp. released its “2010–2011 Mid-Year Forecast” on July 21, and the numbers are encouraging but not overwhelming.

The recovery is underway, although not everyone sees it,” said Nancy D. Sidhu, chief economist for the LAEDC’s Kyser Center for Economic Development, who presented the LAEDC’s findings at a July 21 panel discussion at the Marriott in downtown Los Angeles.

Next year, California should see job numbers inch up 1.3 percent with the unemployment rate dipping from the current 12.3 percent to 11.8 percent.

Los Angeles County will see a 1.2 percent rise in jobs with the unemployment rate moving from its current 12.2 percent to 11.7 percent.

“2011 is going to feel better than 2010,” said Jack Kyser, one of the economists who wrote the forecast and is now retired from the LAEDC. “Companies are still operating lean and mean.”

One of Southern California’s bright spots in 2011 is international trade as businesses and stores bring in more merchandise through the ports of Los Angeles and Long Beach.

Another optimistic sector in Los Angeles County is retail sales, which tumbled 14 percent in 2009. “It was pretty tough out there,” Kyser said. “In 2010, we will see a modest increase in retail sales of 4.6 percent. But consumers will still be focused on value with a 5.6 percent increase in sales in 2011.”

Despite troubled times, retailers are expanding into Southern California to take advantage of lower rents in malls and on busy shopping streets.

However, apparel manufacturing is looking a bit gloomy. “We are going to see continued declines in employment in apparel manufacturing,” Kyser said, noting that apparel manufacturing jobs are increasingly going overseas. The number of people employed in apparel manufacturing in 2009 was 48,400. This year it is 46,400. Next year, that is expected to drop to 45,400.

On the state level, job growth will show modestly positive signs. “The near-term outlook for the California economy is better but still not especially pretty,” the forecast said. “Because the recession was so deep, 2010 won’t feel very good despite improvement in some industries. However, the state’s economy is moving in the right direction.”—Deborah Belgum