Terror Attacks a Setback to Soft Valley Economy
Even before the terror attacks of Sept. 11, the San Fernando Valley’s economic engine was faltering.
Private employment growth had slowed to a near standstill. Unemployment claims had started to climb. Building permits--a sign of future construction--had dramatically dropped.
The slowdown was widespread, according to an annual report on the Valley’s economy released today by Cal State Northridge. And now, in the wake of the attacks that have unhinged the travel, hospitality and entertainment industries, the outlook is even dimmer, said CSUN economics professor Daniel Blake.
“It was already a no-growth economy. This could push it down into a recession,” Blake said. “But it really depends critically on consumer confidence, especially during the holiday season.”
That’s because the Valley’s economy relies heavily on retail trade and services, broad categories that encompass everything from Home Depot stores and Ralphs supermarkets to hotels, movie studios and health care centers. Even as job growth stagnated, consumer spending kept the economy afloat.
Retailers that do the bulk of their business around the holidays are hoping to keep their cash registers humming. But although it is still early, many store owners fear a sluggish season looms.
“We expected to have a tidal wave of sales this year,” said Paul Chavez, owner of a toy shop in Studio City. “But so far that hasn’t materialized.”
Customers at Chavez’s family-run store, RoboToys, can snap up an old-fashioned tin robot for $6.95 or plunk down $1,300 for the Sony Aibo, a high-tech robotic dog. Last fall, Chavez said, things were so busy that he had to turn business away. But now, with October nearly gone, he is starting to worry.
“It’s like people haven’t really gotten into the Christmas spirit yet because of everything that’s been going on,” he said. “At some point, that may turn around. But I can’t count on anything.”
Data Will Be Subject of VICA Meeting
The CSUN report, produced by the university’s San Fernando Valley Economic Research Center, covers 2000 and includes some data through August. The study includes information from Burbank, Glendale, San Fernando, Calabasas, Hidden Hills and the Valley portion of Los Angeles.
The research will be discussed today at a business conference sponsored by the Valley Industry and Commerce Assn. at the Warner Center Marriott.
The report reveals some bright spots, such as increases in jobs related to home furnishings and garden supplies. The Valley’s tiny biotech industry, a haven of high-paying jobs, continues to grow rapidly. Entertainment production and distribution--which employ nearly one of six Valley private-sector workers--added 1.5% more jobs last year.
But growth was meager compared with other years. In 1999, for example, the entertainment industry added five times as many jobs as it did in 2000.
The Valley’s dependence on the film and television industry concerns some analysts.
Studios Have a Glut of Inventory
“The current state is pretty miserable,” said Jack Kyser, chief economist for the Los Angeles County Economic Development Corp. “You’re still suffering from the de facto [actors’ and writers’] strikes, and studios already have a lot of inventory on the shelf waiting to be released. And on the television side of the business, advertising revenues are down, and there are increased costs from news coverage.”
James Harper considers himself lucky to have a job. A North Hollywood set dresser who works on television and film productions, Harper recently landed a gig on a new WB Network sitcom, “Maybe It’s Me.” But all around him, business is drying up.
“Everybody’s calling everybody else for work,” he said. “I know a lot of people who are working maybe one day a week or not at all.”
Valley Jobs Fare Worse Than L.A. County
The CSUN report focused on private-sector employment. But research on all jobs countywide shows the Valley fared worse in 2000 than Los Angeles County as a whole, Kyser said.
Countywide, employment grew by 2% last year. But in the Valley, it dropped by 3.5%, according to Kyser’s figures. He attributed the Valley’s performance to weakness in manufacturing and retail employment, as well as volatility in the entertainment industry.
Even some of the Valley’s stronger sectors, such as the housing market, have sputtered since September. Valley home sales dipped 15% that month and the median price fell, a seasonal downturn worsened by the violence and uncertainty of recent weeks.
Blake, who directs the center that wrote the CSUN report, said foretelling the Valley’s economic future is particularly difficult this year.
“We always forecast based on past situations,” he said. “But we don’t have anything similar to a terrorist attack that killed 6,000 people and was followed by anthrax attacks.”
