California should experience only modest economic growth this year and next, adding nearly a half million new jobs and driving the unemployment rate down to just above 10%, the Los Angeles County Economic Development Corp. said in an annual forecast.
Recovery from the deep recession of 2007-2009 is expected to be at “a painfully slow pace” and “it will take years for the county to return to the four million nonfarm job threshhold that marked most of the last decade,” said the report released Wednesday.
The upbeat but still cautious prediction was in line with an announcement Tuesday from the financial rating agency Standard & Poor's that it upgraded its outlook on California government credit to “positive” from “stable.”
“We think the state is poised for credit improvement – and potentially a higher rating," Standard & Poor's said.
The upgrade in the state’s credit rating “is a powerful vote of confidence,” said Gov. Jerry Brown.
The improved state credit rating, based partially on continued government budget cutting, hasn’t necessarily been good for boosting the Los Angeles County jobs picture. The public sector should lose 3,200 jobs next year on top of another 3,300 in the private sector construction industry, the Economic Development Corp. said.
Despite those losses, the county should pick up a net 15,600 new jobs this year. The biggest gains should be in health services, 5,400; education, 4,800; information including television and film production, 4,100; and leisure and hospitality, 3,900.
International trade through the ports of Los Angeles and Long Beach and Los Angeles International Airport, which surged late last year, is ready to expand along with the national economy. But that projection would hold true only if there is no international political or economic crisis in Europe, the Middle East or elsewhere, the report said.
Barring an international meltdown, the job picture for Los Angeles should brighten in 2013 with the creation of an estimated 22,700 jobs.
“Los Angeles County seems to be moving,” said the report’s principal author, chief economist Robert Kleinhenz, “but it’s improving at a slower pace than the state as a whole and the rest of the nation as a whole.”
This year, the country’s economy should grow by 1.1% and the state’s by 1.5% while Los Angeles County’s growth is forecast at only 0.6%, he said.
Across the region, Orange County, the first Southern California economy to return to positive economic growth in 2010, will lead the transition from recovery to a slow, steady expansion, fostered by its universities, high-tech industries and tourist attractions, the report said. Major construction is planned for the Great Park at the old El Toro Marine Corps Air Station, John Wayne Airport and theme parks.
Residential real estate, particularly for lower-priced condos, could begin to turn around “with prices bottoming out and a small upswing in sales and new home construction,” the report said.
The distressed Inland Empire of San Bernardino and Riverside counties showed its first signs of weak growth in the last four months of 2011 but still is hampered by a large number of foreclosures, falling home values and joblessness projected to remain at above 12% this year.
Home construction could take years to revive. But in the meantime, an uptick in imports fueled by a boost in retail sales could bring more jobs to the burgeoning warehouse, logistics operations and distribution centers.
Cheap land and a large labor force will help support an economic uptick but a true resurgence will take time, the Economic Development Corp. said.
“For the Inland Empire, patience will continue to be the watchword as the region is not expected to see the pre-recession glory days for at least two to three years,” the report cautioned.
Elsewhere in the Southland, Ventura County, with its mix of high-value agricultural crops and high-tech industries, should lag behind the rest of the state in getting back on its feet. Residential real estate will be a drag for at least the next few years.
“Without a question, the whole region is improving and will improve through 2012,” Kleinhenz said. “We’re moving at such a slow pace that at times it looks like were not gaining any ground.
“But, if we look back at the end of they year, we’ll see that the economy has improved.”