The Los Angeles County economy should begin recovering by mid-2003, but the rebound will be a weak one, according to a forecast to be released today by Chapman University.
Chapman economists expect employers in the county to begin adding jobs again this year after a loss of 18,200 payroll positions in 2002. But the gains will be paltry -- only about 3,000 jobs, or 0.1% growth -- and probably not enough to stop the county's unemployment rate from rising. The jobless rate was 6.2% in December.
For the year, more job losses are expected in Los Angeles' long-suffering manufacturing sector, as well as in construction and government payrolls.
Anemic job creation also probably will keep a lid on workers' incomes and spending. The Chapman forecast calls for total personal incomes in Los Angeles County to grow by a modest 2.6%. Although that's better than the estimated increase of 1.4% for last year, it's well below the 6.2% gain posted in 2000.
The county's taxable sales are expected to increase by 2% in 2003, an improvement over the projected gain of 1.1% for last year. Still, after taking inflation into account, Chapman economists predict that taxable sales will decline in 2003.
That's bad news for the struggling retail sector as well as local governments that rely heavily on sales taxes to fund programs already squeezed by the state's budget woes.
Even the red-hot housing sector is expected to cool. Forecasters at the university in Orange aren't predicting a collapse in the county's housing market. By their calculations, the average appreciation has topped 8% annually for the last three years.
Still, the economists say sluggish income and job growth, combined with declining affordability, will soften demand and slow the rate of appreciation to just 1.6% in 2003.