Amid Recession Fears, LA-OC Economy's Real Risk is Worker Shortages

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Amid housing costs, quality-of-life issues and fears about the next recession, the Los Angeles County and Orange County economies are burdened by an unsuspecting phenomenon: businesses can’t find enough workers to fill jobs—which is expanding the labor force but ultimately slowing economic growth.

That’s according to a collection of different local economic forecasts recently held or published over the past two months by the San Gabriel Valley Economic Partnership, Loyola Marymount University, Cal State Fullerton, UCLA, and the Orange County Realtors Association (and in partnership with consultancy firms California Economic Forecast and Beacon Economics). These experts’ opinions spotlight intriguing viewpoints, trends and projections so your credit union can plan appropriately. Click here for more...

Los Angeles County and San Gabriel Valley

San Gabriel Valley Economic Partnership—from the "2019 San Gabriel Valley Economic Forecast Summit” conference:

Los Angeles County’s economic growth will ratchet down slightly in 2019 and 2020 compared to recent years. County domestic product (also known as “local” Growth Domestic Product—or GDP), which is the traditional measurement of economic growth, is expected to come in at 3 percent in 2019 and 2.7 percent in 2020. “This expansion will be on the back of robust employment increases in key service sectors, such as health care and professional/business services”—among other job sectors as well, the forecast report states. Put into context, county domestic product posted average annual 3.2 percent from 2012 – 2018 (helped by the “high” years of 2014 and 2015). Click here for more...

Loyola Marymount University—from the "Forecast LA” conference, presented and published by the Center for the Study of Los Angeles:

Even though Los Angeles residents’ confidence in the local and national economies is still upbeat in general, it has significantly waned from 2018 – 2019 compared to five years ago. Upper and middle-class residents mostly have a positive outlook on the economy (60 percent), but the lower-class is “nearly split” on its perception of the local economy (52 percent) and drops even lower on the national economy (46 percent). “So what’s happening here? Are there foreseeable fissures in next year’s economy?”, the report states. “Not so. An impending recession is on everyone’s mind. It has been talked about as a natural progression after 10 years of record growth and prosperity.” Additionally, even though confidence has dropped in the economy, perceptions of job opportunities are higher than ever over the past four years—bolstering the conclusion that Angelenos’ gut feeling is the economy is in “safe waters” for now. Click here for more...

Orange County

Cal State Fullerton—from the "2019 Spring Economic Forecast” conference, presented and published by the Woods Center for Economic Analysis and Forecasting (at the Mihaylo College of Business and Economics):

One of the most trusted local business indicators in Orange County paints a picture of moderately strong economic growth going into 2020. The Orange County Business Leader Expectations Index (OCBX)—which combines expectations of future business activity/growth and the local economy together—registered a healthy “91” in January 2019 (after ranging between 88 to 98 from 2017 to 2018). For context, it averaged 83 annually from 2013 – 2016. The survey also showed a “general softening of business optimism compared to the last two quarters: Profit expectations were lowered and hiring decisions pulled back somewhat,” the forecast report states. “The survey also showed low expectations of a recession in 2019, a less than 20 percent chance.” Click here for more...

UCLA—from the "Orange County Economic Forecast” conference, presented and published by the UCLA Anderson Forecast and the consultancy firm California Economic Forecast:

It’s hard to make the case for a recession hitting businesses and consumers in Orange County (and the state and nation) in 2019 or 2020 given the economy’s current condition. A recession may not even materialize in 2021—but perhaps in 2022 instead. In reality, economic growth is on track to gradually slow down between now and 2020, hitting a “near recession” pace before perking back up in 2021 (possibly due to a short-term benchmark interest rate cut by the Federal Reserve to fight softening conditions). “For a recession to occur, conditions that cause it have to be significant; they have to occur rapidly; and they have to be sustained,” the forecast report states. “Currently, there are few conditions that might produce a recession, let alone meet those criteria.” Click here for more...

Orange County Realtors Association—from the "2019 Orange County Regional Outlook” conference, presented and published by the consultancy firm Beacon Economics:

Click here to view Orange County economic/industry/demographic trends from consulting firm Beacon Economics’ latest local slideshow presentation for the Orange County Realtors Association (delivered in March 2019).

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