Report Predicts L.A.’s Economy Will Continue to Slow

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L.A. County’s economy won’t go into a recession but it’ll be a close call. So says the latest prediction from the Los Angeles County Economic Development Corp.

Growth will slow to a virtual halt and unemployment will rise, according to the latest forecast released Wednesday morning.

Notable in the mid-year update: Total job growth should inch up by 0.1 percent only 2,300 jobs out of a total employment of 4.1 million for all of 2008. And the unemployment rate, which spiked to 6.8 percent in May, will average 6.2 percent for the year.

Jack Kyser, LAEDC’s chief economist, said that the economy would be pulled down by several factors: a stalled housing market and resulting plunge in construction employment, continued labor unrest in the entertainment industry and looming local government budget deficits. And don’t forget fuel prices.

“It’s a pretty gloomy picture,” Kyser said. “The housing market crash, problems in the financial sector and soaring prices for gasoline and diesel have severely hammered the state and local economies. They are on the brink of falling into a recession.”

Offsetting all these downward forces will be growth in export activity, a robust technology sector and modest growth in international tourism.

As part of the forecast, the LAEDC graded the various industry sectors that typically drive the local economy. Commercial aerospace, which had received an “A” in previous forecasts, dropped to a “B-.” Similar drops were recorded for business and professional services and the tourism sector. Financial services, reflecting the battering that the local bank and mortgage sector has experienced, received a “C-“, as did the entertainment industry.

The two strongest areas were biomedical and technology, which both received grades of “A-.”

Kyser said he expects job growth to pick up slightly in 2009 to a 0.6 percent rate, or a net addition of 25,000 jobs. However, the unemployment rate would remain high, at an annual average of 6.3 percent.

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Howard Fine
Howard Fine is a 23-year veteran of the Los Angeles Business Journal. He covers stories pertaining to healthcare, biomedicine, energy, engineering, construction, and infrastructure. He has won several awards, including Best Body of Work for a single reporter from the Alliance of Area Business Publishers and Distinguished Journalist of the Year from the Society of Professional Journalists.

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