California’s economy made significant strides in recent years with most regions of the state recovering all of the jobs they lost during the Great Recession.
That assessment is included in a new report from the Los Angeles County Economic Development Corp. The LAEDC’s Economic Forecast and Industry Outlook for 2015-2016 will be unveiled today at the Omni Los Angeles Hotel.
The study notes that — with an estimated gross state product of $2.3 trillion in 2014 — the Golden State had the eighth-largest economy in the world, ranking just behind France and Brazil.
California is expected to add 386,400 jobs next year with the biggest gains coming in administrative and support services, professional, scientific and technical services, and leisure and hospitality.
“We have a high-flying economy at the state level that is being pulled along, in part, by the Silicon Valley and the Bay area,” said Robert Kleinhenz, the LAEDC’s chief economist. “But it’s much more diverse than that. In Southern California we find biotech, pharmaceuticals and entertainment as well as Silicon Beach. And then we have a significant agricultural sector that feeds not only the state, but is an essential link to the food chain that supplies the nation and the rest of the world.”
All told, California accounts for more than 13 percent of the nation’s GDP — the biggest single contribution of any state. And California firms have attracted venture capital funding that has equaled or surpassed the amount received by companies in all of the other 49 states combined.
But there are challenges.
The unfunded liability of state retiree health care costs remains a concern, critical infrastructure projects continue to be deferred and there is a severe shortage of affordable housing — particularly in metro areas that are seeing the fastest rates of job growth.
“The cost of housing has historically been high in California — roughly double the nation’s median price,” Kleinhenz said. “We’ll be hearing more about inadequate housing, and affordability will fall.”
California’s high housing costs have also made it difficult for local companies to recruit out-of-state workers.
More locally, Los Angeles County has seen significant growth in recent years with nearly 100,000 jobs added last year and more than 100,000 expected this year.
The county’s 2.5 percent average annual increase during the first part of this year consistently outpaced the nation in job growth. That drove the unemployment rate down to 7.1 percent in July, a full percentage point below July 2014 and the lowest since mid-2008, the report said.
More recent figures from the state Employment Development Department show the county’s jobless rate fell to 6.9 percent in August.
The county is expected to add 77,700 jobs next year, led by employment increases in health care and social assistance (13,600 jobs), administrative and support services (11,500) and professional, scientific and technical services (11,200).
Southern California’s grocery industry will also add to the mix with two supermarket chains poised to move into the region.
Grocery Outlet Bargain Market announced earlier this month it plans to open 14 stores in the greater Los Angeles area beginning in December. And the company plans to expand beyond that.
“Our plan is to open 20 to 30 stores each year in Southern California over the next several years,” said Melissa Porter, the company’s vice president of marketing.
Aldi, a German discount grocer with nearly 1,400 U.S. stores, plans to open 45 locations in Southern California, with the first stores opening in March. And Lidl, another German discount grocer that operates about 11,000 stores in Europe, also plans to enter the U.S. with a barrage of 2,000 stores by 2020.
Los Angeles County’s housing market has also continued to improve with the median sales price hitting $492,000 in July, a 4.7 percent increase from a year earlier. Home sales also rose 9.6 percent through the first seven months of 2015, the report said.
The Inland Empire has also experienced strong employment growth. The two-county region outpaced the state and the rest of the nation in 2014 for the third year in a row.
The growth has been especially welcome for a region that shouldered the brunt of Southern California’s housing meltdown during the Great Recession.
The Inland Empire is expected to add 44,100 jobs next year with transportation and utilities leading the way with 6,800 new jobs. The region’s housing market is also looking up.
San Bernardino County’s median price has trended upward, reaching $267,000 in July 2015, roughly on a par with home prices in early 2008.
“It’s going in the right direction but it’s been stalling a bit,” said Anthony Bautista, a Realtor in Rancho Cucamonga. “There have been some problems with inventory and that’s been keeping prices up.”
Many Inland Empire homeowners are still under water — meaning they owe more on their home than the home is currently worth — and others are anxious to see when the Federal Reserve will hike interest rates.
“That could be a huge hit to the housing market,” Bautista said.
