State and L.A. County Have Begun a Comeback, Economist Says
After weathering the worst recession since the Depression and enduring massive job losses, Los Angeles County’s economy is slowly recovering, even in the hard-hit aerospace industry, the chief economist of a business-backed group said Tuesday.
The county economy “has hit bottom” but “is headed in the right direction,” Jack Kyser of the Economic Development Corp. of Los Angeles County told the Board of Supervisors. “We think it will keep going in 1996 and 1997 . . . but we still have some ways to go.”
Kyser predicted that the local economy--fueled by international trade, entertainment, specialized business services and construction--will create 89,000 jobs this year, a 45% improvement over 1995.
As the supervisors listened intently, Kyser said the county’s economy still faces significant challenges, including overcoming an 8.2% unemployment rate, displaced workers in aerospace, retail jobs and financial services, and a real estate market that is “still in a state of flux.”
Kyser said it could take another year or so before declining home prices and a commercial real estate business in “a state of weakness” turn around.
Nevertheless, he said, business and government leaders in Los Angeles need to communicate with the rest of the nation that “there is something going on here in Southern California.”
Statewide, California employers created 178,000 jobs last year, easily the best year since 1989. To many analysts, the numbers suggest that the state recovery is accelerating despite lackluster business growth nationally.
In the county, nonagricultural jobs fell by 431,000 over four years after peaking in 1990, Kyser said. One study estimated that the county accounted for 71% of all jobs lost in California during that period. But revised data from the state Employment Development Department shows that the economy turned around last year and added 61,000 new jobs.
Kyser cautiously forecast “very, very modest” increases in aerospace, which still provides many high-wage jobs in the county.
The economist cautioned that the region will feel the impact of layoffs in the supermarket and department store business and several thousand job losses from the merger of First Interstate Bank and Wells Fargo.
But Kyser and Lee Harrington, president and chief executive officer of the Economic Development Corp., both predicted healthy effects from the $1.8-billion Alameda Corridor project to speed trains and trucks from the ports of Los Angeles and Long Beach to rail yards near downtown.
The huge project, coupled with expansion of the nation’s busiest ports, has the potential to create 700,000 jobs in international trade by the year 2010, according to its supporters.
Supervisor Gloria Molina challenged the business leaders to make sure that residents of the economically disadvantaged cities along the corridor share in the jobs created by the project.
“This issue needs some leadership,” she said.
The positive economic news was a welcome relief for leaders of the nation’s largest county government, which has been slogging through the worst fiscal crisis in its history.
Kyser said his economic forecast assumes that the county government’s downsizing will continue, costing another 3,000 jobs this year.
The effects of the overall economic recovery may be slow to be felt in government’s depleted coffers, Chief Administrative Officer Sally Reed said in an interview.
Although sales tax receipts are more responsive to economic changes, Reed said the county is not seeing improvement in property taxes because real estate values have not recovered.
While increased employment will tend to decrease dependence on welfare programs, Reed cautioned that many of the new jobs do not come with health insurance benefits, meaning the county still must provide health care for the working poor.
Reed said the most important key to the county’s well-being continues to be help from Sacramento and Washington.
The supervisors clearly were reassured after hearing from top Clinton administration officials that a $364-million bailout of the county’s troubled health system will come through as promised by President Clinton. Molina said the county should be receiving “a comfort letter” before the end of the week committing the administration to provide the federal assistance.
But Supervisor Zev Yaroslavsky said
it is clear that “some real thinking and collaborating” with federal officials will be necessary to deal with the second phase of the county’s five-year request to shift federal funds from its hospital-heavy health care system to outpatient preventive care in community clinics. “This is not going to be easy,” he said.
Supervisor Yvonne Brathwaite Burke urged her colleagues to move aggressively in lobbying Congress to make sure the restructuring of the county’s health care system is protected from sweeping changes considered for the federal Medicaid program.
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Job Rebound
After a steep slide, Los Angeles County’s economy turned around last year. The growth in new jobs is expected to accelerate this year, but employment levels remain far below their high point. Here is how employment has fluctuated:
*--*
Year Jobs in county Employment* 1990 +21,800 4,133,300 1991 -150,600 3,982,700 1992 -178,300 3,804,400 1993 -96,700 3,707,700 1994 -5,800 3,701,900 1995 +60,800 3,762,700 1996** +89,400 3,852,100
*--*
*Nonagricultural employment
**Projected.
Source: California Employment Development Department data and projection by Economic Development Corp. of L.A. County
