California Apparel News

The good news is the economy isn’t expected to get worse this year. The bad news is the economy isn’t expected to get much better.

That was the message in the Los Angeles Economic Development Corp.’s 2010–2011 Economic Forecast and Industry Outlook, released Feb. 17, which predicted a measured recovery for the national, state and Southern California economies.

“The economy is certainly still a dog show, but 2010 is shaping up to be an encouraging year,” said Frank Mottek, the host of the “KNX Business Hour,” who moderated the presentation.

The California economy, which remains the eighth-largest economy in the world, took a beating in 2009, said Lloyd Greif, chairman of the LAEDC. Still, he said, there is reason to be hopeful in 2010 and 2011. According to the report, presented at the Los Angeles Marriott Downtown, the national economy will see a growth of 2.6 percent in 2010. In 2011, the LAEDC predicts, the U.S. economy will grow an additional 3.1 percent.

Closer to home, state unemployment remains high. One in five workers in California is currently under-employed, and 121,800 more workers are expected to lose their jobs this year.

“Southern California’s five metropolitan areas will also be in recovery mode during 2010,” said Jack Kyser, the founding economist of the Kyser Center for Economic Research at the LAEDC. “Like the nation and the state, it will be measured recovery, with more job losses and a high unemployment rate in 2010.” According to the report, Los Angeles County is expected to see the smallest job losses, with non-farm employment slipping by 0.5 percent; Orange County and Ventura County should each see a 0.6 percent drop in non-farm employment; San Diego County should see a 0.7 percent decline in non-farm jobs; and the Riverside-San Bernardino area could see non-farm jobs drop approximately 1.1 percent in 2010. Still, the report said the rate of job losses has been staunched and three sectors—information, private education and health services—will see employment growth in 2010.

In contrast, in 2009 there were 668,200 jobs lost in California, said Nancy Sidhu, the LAEDC’s chief economist. Economic conditions are expected to improve in 2011, with employment growing by 1 percent, the report said.

On the international trade front, traffic volumes were down drastically at the two ports in the Los Angeles area, the busiest seaport in the country. For 2009, the value of imports coming through California’s ports declined nearly 22 percent, and exports dropped nearly 20 percent. Trade flows are beginning to improve as retailers bring in more goods and emerging nations such as China and India buy more California agricultural goods and other products. Further improvement is foreseen for 2011.

Recent Los Angeles projects that are adding jobs to the economy include the recent opening of the JW Marriott hotel, with 878 rooms, near the Staples Center; the Nokia Theatre; and the Los Angeles Convention Center.

Another new hotel is the 305-room W Hollywood Hotel and condo project that is lifting the corner of Hollywood and Vine.Outlook for apparel

While some industries have a rosier outlook, the apparel industry is expected to be among the worst-performing sectors in the state this year.

According to the report, Los Angeles County manufacturing and retail jobs are expected to drop by 14.7 percent and 16.6 percent, respectively, in 2010.

More specifically, the county’s apparel- and textile-manufacturing community will shed 5,600 jobs but see a slight uptick in wholesaling throughout the year.

The report said that California’s retail sales dropped precipitously last winter and spring.

The report indicated that while more apparel retail store closures are expected in early 2010, some savvy retailers and designers are finding success in e-tailing and pop-up shops. The report didn’t offer a forecast on consumer spending and whether shoppers will once again place a premium on buying new clothes.

“When we get through 2010, we can all pat ourselves on the back and say, ’We did it,’” Kyser said.

For the full report, visit http://www.laedc.org/newsroom/laedcforecast-feb2010.pdf.