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CSULB_SCAG_Forecast

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  • pg 1
									    CALIFORNIA STATE UNIVERSITY

    LONG BEACH
Southern California Regional
     Economic Forecast
       Lisa M. Grobar, Ph. D.
     Director, CSULB Economic
          Forecast Project


 California State University, Long Beach
             National Outlook

                     2003    2004    2005

GDP Growth           3.0%     4.4%   3.2%

Inflation            2.3%     2.7%   2.2%

Unemployment         6.0%    5.5%    5.4%

Federal Funds Rate   1.1%    1.3%    2.6%


     California State University, Long Beach
         Forecast for 2004-2005
• GDP growth in 2004 best year since 1999
• Next year, economy slows in response to high
  oil prices and Fed tightening
• A weaker dollar and an improving world
  economy will boost exports and is welcomed
  news to manufacturers
• Healthy job formation in 2004 & 2005 but the
  unemployment rate will be slow in coming
  down



    California State University, Long Beach
        The Region’s Economy Is Showing
              Some Improvement
3.0%
2.5%
2.0%
1.5%
1.0%
0.5%
0.0%
-0.5%
        1999   2000   2001   2002    2003   2004YTD

        California State University, Long Beach
      Total Nonfarm Employment Growth
             Region and the Nation
4%

3%
2%
1%

0%
-1%

-2%

-3%

-4%
  1991                1996            2001
                        US   Region


         California State University, Long Beach
  Factors Influencing the Region
            2005-2007
• Long anticipated recovery in national
  employment growth
• Manufacturing drag eases substantially
• Changes in macroeconomic “fundamentals”
  – Exchange rate
  – Interest rates
• Budgetary problems in Sacramento



    California State University, Long Beach
        Regional Durable Manufacturing
             Employment Growth
 2.0%
                                    forecast
 1.0%
 0.0%
-1.0%
-2.0%
-3.0%
-4.0%
-5.0%
-6.0%
-7.0%
-8.0%
        2000   2001   2002   2003    2004      2005

        California State University, Long Beach
         Regional Leisure & Hospitality
             Employment Growth
4.5%
                                     forecast
4.0%
3.5%
3.0%
2.5%
2.0%
1.5%
1.0%
0.5%
0.0%
       2000   2001    2002   2003    2004       2005

        California State University, Long Beach
             Regional Construction
7%
             Employment Growth
6%
                                    forecast
5%
4%
3%
2%
1%
0%
-1%
      2000    2001   2002   2003   2004        2005

       California State University, Long Beach
              Regional Health Services
5.0%
               Employment Growth
4.5%
4.0%
3.5%
                                         forecast
3.0%
2.5%
2.0%
1.5%
1.0%
0.5%
0.0%
       2000      2001   2002   2003   2004          2005




        California State University, Long Beach
        Regional State & Local Gov’t
5%
             Employment Growth
4%
3%
2%
                                       forecast
1%
0%
-1%
-2%
      2000   2001   2002    2003   2004           2005

       California State University, Long Beach
               Regional Total Nonfarm
3.0%
                Employment Growth
                                       forecast
2.5%
2.0%
1.5%
1.0%
0.5%
0.0%
-0.5%
        2000     2001   2002   2003   2004        2005

        California State University, Long Beach
           Regional Taxable Sales
12%

10%

8%
                                           forecast
6%

4%

2%

0%
      98    99   00   01    02   03est.   04          05

       California State University, Long Beach
    Economic Outlook
    Los Angeles County




California State University, Long Beach
 Los Angeles County Economy
• Los Angeles County is “most improved”
  county this year.
• Manufacturing losses are beginning to
  decelerate, particularly in durables
• Aerospace manufacturing is adding jobs!
• Business Services are growing
  – Double-digit growth in employment services


   California State University, Long Beach
     Los Angeles County Job Losses
       in Durable Manufacturing
     0

 -5,000

-10,000

-15,000

-20,000

-25,000

-30,000
       2002             2003           2004


          California State University, Long Beach
Los Angeles County 2004 Aerospace
   Manufacturing Employment
39,400

39,200

39,000

38,800

38,600

38,400

38,200
         Jan   Feb   Mar   April   May   June   July   Aug   Sept


         California State University, Long Beach
        Los Angeles County: Durable
     Manufacturing Employment Growth
 1                                 forecast

 0
-1
-2
-3
-4
-5
-6
-7
-8
     2000   2001   2002   2003   2004         2005   2006

        California State University, Long Beach
                      Los Angeles County
                  Health and Business Services
     percent
5


4

                                                              forecast
3


2


1


0
           2000     2001   2002   2003      2004       2005          2006   2007
-1


-2


-3
                                   Health   Business



                   California State University, Long Beach
                       Los Angeles
                  Hotel Occupancy Rates
       78%
       76%
       74%
       72%
       70%
       68%
       66%
       64%
       62%
                 2000   2001   2002   2003   2004 YTD
PKF Consulting


         California State University, Long Beach
               Los Angeles County
5.0%
              Leisure and Hospitality
                                            forecast
4.5%
4.0%
3.5%
3.0%
2.5%
2.0%
1.5%
1.0%
0.5%
0.0%
       2000    2001   2002   2003    2004       2005

        California State University, Long Beach
        Los Angeles County
• Other bright spots include construction,
 finance and real estate, transportation
• Some growth in retail trade employment
• Weak spots: information (motion
 pictures), state & local government


    California State University, Long Beach
   Motion Picture Industry
Production Days in Los Angeles
16,000


14,000


12,000


10,000
                                                                             Features
 8,000                                                                       Commercials
                                                                             Television
 6,000


 4,000


 2,000


    0
         1996   1997     1998     1999     2000     2001       2002   2003
            Source: Entertainment Industry Development Corp.


California State University, Long Beach
    Los Angeles County Total Nonfarm
2.0%
          Employment Growth
1.5%
                                     forecast
1.0%
0.5%
0.0%
-0.5%
-1.0%
-1.5%
        2000   2001   2002   2003    2004       2005

        California State University, Long Beach
     Economic Outlook
Ventura and Imperial Counties




  California State University, Long Beach
        Ventura County
Construction Employment Growth
percent
20

15

10

 5

 0

 -5

-10
   2002               2003            2004


          California State University, Long Beach
          Ventura County
• Sources of strength: professional & business
  services, education & health services, trade,
  and real estate
• Weakness similar to region – state & local
  government, information, little growth in
  manufacturing



    California State University, Long Beach
                Ventura County
       Total Nonfarm Employment Growth
5.0%
4.5%
4.0%
3.5%
3.0%
2.5%                                 forecast
2.0%
1.5%
1.0%
0.5%
0.0%
        2000   2001    2002   2003     2004     2005

         California State University, Long Beach
     Imperial County




California State University, Long Beach
Imperial County Employment


                            Agriculture

                            State & Local
                            Gov't
                            Retail

                            Other




California State University, Long Beach
     Imperial County Employment
         (thousands of jobs)
25

20

15

10

 5

 0
     Agriculture          Retail         State & Local Gov't

                   Sept. 2003   Sept. 2004

     California State University, Long Beach
               Imperial County
       State & Local Gov’t Employment
 6%
 5%
 4%
 3%
                              forecast
 2%
 1%
 0%
-1%
-2%
-3%
      2000   2001   2002   2003     2004   2005   2006

        California State University, Long Beach
              Imperial County
6%
         Total Nonfarm Employment
5%
4%
3%
2%
                                  forecast
1%
0%
-1%
      2000   2001   2002   2003   2004       2005   2006

        California State University, Long Beach
          A Note on Housing

• Affordability in the region is now at
  record-low levels, while appreciation
  rates remain well into the double-digits.
• Will higher interest rates bring about a
  “soft landing” in region’s housing
  market?


    California State University, Long Beach
              The last two cycles
         ended with a significant shock
                  [year-to-year percentage change in median price]

         1982: mortgage rates             1990-93: region loses
             reach 17.4%                     half million jobs
30
25
20
15
10
 5
 0
 -5 80                    85         90                     95       00
-10
-15
      California State University, Long Beach
                 Summary
• The regional economy continues to improve,
  but growth will still be below-average this year.
• We expect to see a significant acceleration in
  employment growth in 2005, mirroring
  national trends.
• Performance of sectors will change as macro
  fundamentals change – higher interest rates
  will slow housing market – but by how much?



    California State University, Long Beach

								
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