san gabriel valley economic forecast: 2019-2020 · 2019. 9. 6. · how important is california?...

SAN GABRIEL VALLEY ECONOMIC

FORECAST: 2019-2020

SOMJITA MITRA, PH.D.DIRECTOR, INSTITUTE FOR APPLIED ECONOMICSLOS ANGELES COUNTY ECONOMIC DEVELOPMENT CORPORATION April 4, 2019

“I NEVER

THINK OF

THE

FUTURE—IT

COMES

SOON

ENOUGH”

--Albert Einstein

Today:

➢ California

➢ Los Angeles County

➢ Housing Issues

➢ San Gabriel Valley

➢ Factors That Affect The

Forecast

➢ Concluding Remarks

How Important is California?

Contribution to US GDP

Bureau of Economic Analysis, 2018

California

14.4%

Texas

8.6%

New York

8.2%

Illinois

4.2%

Pennsylvania

3.9%

Ohio

3.3%

New Jersey

3.1%

All Other

States

48.8%

California Indicators

GDP Growth Unemployment

3.4% 4.2%2.9% 3.9%

Looking Ahead To 2020

GSP Growth Unemployment Personal

Income Growth

3.0% 3.4%GDP: 2.4% 3.1% 2.5%

2.8%

New Governor Priorities

Housing

Natural

Disasters

So Things Look Good?

Unemployment Rates by

County

Los Angeles Labor Force:

5.2M

Los Angeles Employment:

4.9M

Unemployment Rate: 4.6%

Let’s Talk About

Wages

Wages by County

Wage Growth Lagging Behind

Source: New York Times

-Declining Unions

-Competition

Restraints

-Lagging Minimum

Wage

-Globalization

-Automation

-Anemic Productivity

-Outsourcing

-Contract Work

-Gig Work

Wages Don’t Go Far

$16,149

$20,683

$25,724

$32,413$30,453 $30,890

$29,176

$32,413

10,000

20,000

30,000

1 2 3 4

Series1

Series2

Per Capita Income

Nominal and $2017

Source: ACS 2017 1-year estimates; BLS

Consumer Price Index

What’s Happening With

Prices?

Los Angeles

Looking Ahead To 2020

GCP Growth Unemployment Personal

Income Growth

2.7% 4.3% 2.1%

Jobs Forecast By Industry

Education & Health

Leisure & Hospitality

Prof and Bus Svcs

Const, Natural Res, and Min

Info

Fin Svcs

Trans,Trade,Util

Other Svcs

Govt

Mfg

47,000

39,600

24,800

9,600

5,700

2,100

400

400

-1,400

-6,600

2019f 2020f

What Are The Jobs?

Top 10 Occupations

Total Jobs

2019-2020

Annual

Wage

Combined Food Preparation and Serving

Workers, Including Fast Food8,360

$24,934

Cashiers 7,840$26,425

Personal Care Aides 18,040$28,585

LIVING WAGE$29,869

Stock Clerks and Order Fillers 4,000$29,950

Waiters and Waitresses 7,640

$30,406

Retail Salespersons 8,160$30,950

Laborers and Freight, Stock, and

Material Movers, Hand5,240

$31,278

Office Clerks, General 4,240$35,447

Registered Nurses 4,560$97,130

General and Operations Managers 4,120$141,661

Educational and Experience

Requirements

1, 38.8%

2, 28.1%

3 5.2%

4, 1.4%

5, 1.9%

6, 20.5%

Master’s,1.7%

8, 2.4%

Source: Estimates by LAEDC

So What Does This Mean?

We’re Working But…

-A Record 7 Million

Americans Are 90 Days

Behind on Their Auto Loan

Payments

-A Growing Number of

Americans Have More Credit-

Card Debt than Savings

-The Government Shutdown

Spotlights a Bigger Issue:

78% of US Workers Live

Paycheck to Paycheck

So What Does This Mean?

Home Affordability

Median

Home Price

Minimum

Qualifying

Income

Housing

Affordability

Index

California Single-Family Home $564,270 $122,340 28

Bay Area $910,000 $197,290 22

Los Angeles Metro Area $510,000 $110,570 30

Inland Empire $360,000 $78,050 40

U.S. $257,600 $55,850 54

Source: California Association of Realtors

Housing Permits

0

20

40

60

80

100

120

140

160

180

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19

Annual Housing Permits (2000 Baseline)

Series1 Series2 Series3

Higher Rates Hurt

Q2-2018 Median Price $596,730

20% Down-payment $119,346

INTEREST RATE

MONTHLY MORTGAGE

SERIES: Housing Affordability Index

SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

Minimum Qualifying Income

INTEREST RATE

$107,956$113,196

$118,614$124,203

$129,958$135,871

$141,936$148,145

$0

$20,000

$40,000

$60,000

$80,000

$100,000

$120,000

$140,000

$160,000

100.0% 200.0% 300.0% 400.0% 500.0% 600.0% 700.0% 800.0%

Source: California Association of Realtors

$2,013$2,144

$2,279$2,419$2,563

$2,711$2,862$3,017

$0

$400

$800

$1,200

$1,600

$2,000

$2,400

$2,800

$3,200

Can You Ever Afford To Buy?

Source: Zillow

If People Can’t Buy--

They Rent

Source: Zillow

Median income earners in LA

need to spend 47 percent of

income on rental housing

Average rent is $33,400/year

Lower Income Earners Suffer

Even More

Source: Zillow

Majority Renter State by

2025

SERIES: Homeownership RateSOURCE: U.S. Census Bureau, American Community Survey, C.A.R. projection

57.1%

59.7%

56.1%

41.0%

47.3%

44.2%

30%

40%

50%

60%

70%

1 2 3 4 5 6 7 8 9

California Homeownership Rate


Source: California Realtor Association

Housing Issues

Homeownership Largest

Source of Wealth for Middle-

Class

Business Location Decisions

Affected

Quality of Life Issues

People Moving Out of Los

Angeles and even out of

California

Constraint on Economic

Growth

San Gabriel

Valley

San Gabriel Valley

Demographics

1.494 1.493 1.491 1.4961.505

1.5151.522 1.525 1.528

1.5401.546

1.551 1.556

1.45

1.50

1.55

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

f

Mill

ion

s

Population (millions)

Source: California Department of Finance

45.4%

48.4%

30.2%

14.3%

18.9%

26.5%

3.1%

7.9%

San Gabriel Valley

Los Angeles County

Race and Ethnicity

Hispanic Asian White Black Other Two or more races

NOTE: Other Race includes American Indian and Alaskan Native, Native Hawaiian or Pacific Islander and

Some Other Race

Source: U.S. Census Bureau, 2017 ACS 5-year estimates

San Gabriel Valley Employment

Construction4%

Manufacturing8%

Wholesale Trade6%

Retail Trade11%

Financial Activities6%

Professional Services13%

Health Services14%

Leisure & Hospitality12%

Public Administration10%

Other16%

Source: California EDD

San Gabriel Valley

Employment Trends

103.4

75.0

95.0

117.8

60

80

100

120

140

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

(2007=100)Total SGV

Public Sector

Goods-Producing

Trade, Transport, Utilities

Other Services

Source: California EDD; forecasts by LAEDC

San Gabriel Valley

Average Annual Wages

$94,761

$75,739

$67,634

$65,664

$61,206

$60,219

$57,206

$55,049

$49,511

$49,265

$43,255

$32,700

$31,941

$22,629

Financial Activities

Information

Professional & Business Services

Transportation & Utilities

Construction

Public Administration

Manufacturing

Wholesale Trade

Educational Services

Natural Resources & Mining

Health Care and Social Assistance

Retail Trade

Other Services

Leisure & HospitalitySource: California EDD

Total, All Industries:

SGV: $54,770

LA County: $65,112

San Gabriel Valley

Wage Differentials

-$10,613

-$6,599

-$3,307

-$3,979

-$11,662

-$9,991

-$10,541

-$21,710

-$33,843

-$4,407

-$3,971

-$12,203

-$56,248

-$29,180


Other Services

Retail Trade




Wholesale Trade

Manufacturing

Public Administration

Construction



Information


Source: California EDD

Total, All

Industries

-$10,349

San Gabriel Valley

Share of LA County Businesses

16%

18%

17%

23%

18%

20%

6%

18%

16%

10%

26%

14%

14%


Construction

Manufacturing

Wholesale Trade

Retail Trade


Information



Education

Health Services


Other Services

Sources: CA EDD

San Gabriel Valley

Business Ownership by Race

42%

16%

27%

25%

27%

51%

3%

6%

San GabrielValley

Los AngelesCounty

Asian Hispanic White Black Other

Source: U.S. Census Bureau, 2012 Survey of Business Owners

San Gabriel Valley Share of FDI

Establishments by Country

1.7%

1.0%

1.0%

6.1%

15.6%

8.0%

7.7%

7.9%

3.2%

0.8%

1.5%

1.2%

18.3%

0.8%

1.7%

2.9%

1.0%

1.2%

1.2%

2.9%

8.2%

AUSTRALIA

BELGIUM

BERMUDA

CANADA

CHINA

ENGLAND

FRANCE

GERMANY

HONG KONG

INDIA

IRELAND

ITALY

JAPAN

KOREA REP OF

LUXEMBOURG

MEXICO

NETHERLANDS

PHILIPPINES

SWEDEN

SWITZERLAND

TAIWAN

Share of FDI Establishments by

Industry in San Gabriel Valley

4.7%

4.7%

0.8%

1.5%

1.1%

13.6%

2.2%

5.0%

13.7%

0.3%

1.1%

4.8%

0.7%

19.6%

4.1%

22.0%

Accommodation and Food Services

Administrative Support

Arts, Entertainment and Recreation

Construction


Finance and Insurance


Information

Manufacturing

Mining

Other Services

Professional, Scientific, and Technical Services

Real Estate and Rental and Leasing

Retail Trade

Transportation and Warehousing

Wholesale Trade

Looking Ahead Through 2020

Key Economic Indicators --

Population

2018e 1,545,781

2019f 1,551,074

2020f 1,555,919

10,138

Key Economic Indicators –

Total Employment

2018e 696,068

2019f 698,491

2020f 700,224

4,156


Payroll of Workers ($M)

2018e $36,124M

2019f $37,438M

2020f $38,687M

$2.56B


Housing Permits

2018e 2,082

2019f 2,145

2020f 2,310

228 units


Taxable Sales ($M)

2018e $23,304M

2019f $23,875M

2020f $24,412M

$1.1B

“THE only

function of

economic

forecasting

is to make

astrology

look

respectable,”

--John Kenneth

Galbraith

What Can Affect Our Forecast?

The 2018 to 2019 Partial

Shutdown

• Lasted from December 22nd, 2018 to January 25, 2019 (35 days)

• 800,000 government employees (including our fellow Californians) went without pay

• The Congressional Budget Office estimates 0.1 loss to real GDP in Q4 2018 and 0.2 loss to real GDP in Q1 2019; though much of the loss will be recovered in following quarters, $3 billion will be permanently lost

• Departments affected: Agriculture, Commerce, Interior, Transportation, State, Justice, Homeland Security, Treasury, Housing and Urban Development (HUD)

• Over $65 billion in federal spending in LA County last year, providing for 48,000 direct jobs

• REMI impact resiliency study takes into account forgone output in 2018 and 2019

Estimated Impacts of the

2018-19 Shutdown

-450

-400

-350

-300

-250

-200

-150

-100

-50

0

50

100

1 2 3 4 5 6 7 8 9 10 11 12 13

Im

pa

cts, m

illio

ns ($

2

00

9)

Year


Estimated Losses:

❑ GDP: $333 million

❑ Output: $529 million

❑ Income: $252 million

The 2019 LAUSD/United

Teachers Strike

• Lasted from January 14th

to January 22nd

, 2019 (8

days)

• United Teachers LA estimated 30,000 of their

members went on strike, though LAPD estimated an

average of 21,000 strikers per day

• At its lowest point, recorded attendance was at only

15 percent of recorded total enrollment for K through

12 grades

• LAUSD estimates over $125 million in costs to the

district; costs likely higher due to costs to families

requiring childcare and making other arrangements

for children not attending schools during the strike

• The LAEDC estimated impacts based on estimated

forgone output from the public local education sector

Estimated Impacts of

LAUSD/UTLA Teachers’ Strike

-90

-80

-70

-60

-50

-40

-30

-20

-10

0

10

20

1 2 3 4 5 6 7 8 9 10 11 12 13

Im

pa

cts, m

illio

ns ($

2

00

9)

Year


Estimated Losses:

❑ GDP: $48.6 million

❑ Output: $75.9 million

❑ Income: $38.0 million

The Woolsey Fire in Los

Angeles County

• Burned almost 97,000 acres from November 8th to 21st, 2018

• An estimated 1,643 structures destroyed with another 364 structures damaged across both Los Angeles and Ventura counties

• Estimated between $4 and $6 billion in total losses, accounting for fire and smoke damage, demand surge for certain goods and services, and debris removal

• 1 of 7 fires greater than 50,000 acres in 2018

• The LAEDC’s estimates are based upon residential structure losses as a proportion of total capital stock and estimated foregone county output.

Economic Impacts of the

Woolsey Fire

-25.0

-20.0

-15.0

-10.0

-5.0

0.0

5.0

1 2 3 4 5 6 7 8 9 10 11 12 13

Im

pa

cts, m

illio

ns ($

2

00

9)

Year


Estimated Losses:

❑ GDP: $12.0 billion

❑ Output: $19.8 billion

❑ Income: $6.0 billion

Conclusion

Economic growth will continue

Jobs being added

Unemployment will continue to fall

Personal income will rise

Caution!

Critical housing shortage

Economic prosperity not benefitting all

Extreme weather/climate issues

Political gridlock

FULL

REPORT

AVAILABLE

ONLINE

TODAY!

SGVEP.ORG

[email protected](213) 236-4881

Thank You!

san gabriel valley economic forecast: 2019-2020 · 2019. 9. 6. · how important is california?...

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