Press Release: Southern California Association of Governments
November 19, 2001
SAN MARINO, CA -- Economic experts from California State University, Long Beach (CSULB) and California State University,
Fullerton (CSUF) presented a cautious outlook for slowed economic growth in the Southern California region during
2002 and 2003 at today's Fifth Annual Regional Economic Forecast Conference, sponsored by the Southern California
Association of Governments (SCAG).
Nearly 200 local elected officials and staff, private sector executives and academics attended the SCAG conference
held at the Huntington Library in San Marino. The forecasts presented are the only predictions available that are
exclusively devoted to the short-term economic outlook (2002-2003) for the six-county (Los Angeles, Orange, Ventura,
San Bernardino, Riverside and Imperial) Southern California region as a whole. In addition to the forecast presentations,
the conference included a series of presentations and panel discussions to examine how the consequences of the
September 11th terrorist attacks may impact different elements of the Southern California economy in the short-term.
``The entire nation has been deeply touched in many ways by the tragic events of September 11th and the ongoing
ramifications have been felt far and wide, including here in Southern California,'' said Mark Pisano, executive
director of SCAG. ``With Southern California's tremendous reliance on travel, tourism and trade as a key part of
the regional economy, it is inevitable that our region will endure some significant economic impact, at least in
the short-term.''
The CSULB forecast was presented by Dr. Lisa Grobar, who noted that while an economic downturn will definitely
be felt in Southern California, the region's economy seems to be in a better position to withstand short-term national
recessionary trends than it was during the recession of the 1990s. The region's job growth, which had been running
at around three percent over the last four years, is projected to slow to just above one percent over the next
two years. Service-sector employment, a mainstay of the regional economy, will continue to grow at around two percent
over the next two years, down slightly from the three percent growth rate of the last four years. However, durable
goods manufacturing continues to show job losses, with no turnaround expected until 2004. The upside for the region
is that anticipated federal expenditures on defense and security-related investments will likely increase significantly
in Southern California.
There are definite signs of an adverse impact in the travel and tourism industry from the events of September 11th.
During the week of September 22nd, hotel occupancy rates stood at only 53% in Los Angeles and 42% in Anaheim, marking
declines of 36% and 46%, respectively, when compared to the same time period last year. Barring further incidents,
it is believed that the tourism industry will recover somewhat in the near term, but a full recovery could take
six to twelve months.
According to Dr. Anil Puri, dean of CSUF's College of Business and Economics, while the national economy rapidly
descended into a significant slowdown earlier this year, Southern California's economy had been relatively healthy
prior to September 11th, thanks largely to economic momentum built up during 2000. Through August, regional service
employment was up by almost 50,000 jobs, while government jobs grew by 26,000. However, the construction and retail
sectors slowed significantly over that time, growing at about one-third their pace in 2000.
Both state and local government are also bracing for the effects of September, with dwindling sales tax revenue
expected to present government with more difficult budget options over the next two fiscal years. With the expected
decline in economic activity during the remainder of the year and the early part of next year, payroll employment
in Southern California is projected to grow by only 1.3% in 2001 and by 1.1% in 2002. The regional unemployment
rate is expected to climb to 5% in 2001 and 5.8 % in 2002.
The CSUF forecast, like its Long Beach counterpart, also examined the outlook for individual counties within Southern
California.
-- Total payroll employment in Los Angeles County is expected to increase
by only 0.7% in 2001. This will decrease further to 0.5% growth in
2002 before recovering to a 1.2 - 1.3% growth rate in 2003 and beyond.
-- Orange County employment growth will decline to 2.3% in 2001 and 1.6%
in 2002. The county unemployment rate will rise from 2.9 to 3.3%
between 2001 and 2002.
-- Riverside and San Bernardino Counties will show the sharpest slowdown
in payroll job growth, dropping from 5.6% in 2000 to 2.4% in 2001 and
2.3% in 2002. The biggest setbacks are expected in construction,
wholesale and retail sectors. The Inland Empire's unemployment rate
-- expected to reach a 20-year low of 4.9% in 2001 -- is projected to
jump back up to 6.1% in 2002 before stabilizing in the 5.7 - 5.9%
range.
-- Employment growth in Ventura County will drop from 4% in 2000 to
1.4% and 1.6% in 2001 and 2002, respectively.
Nationally, both forecasts show a slowing of the U.S. economy but with a continuance of moderate growth and
low interest rates. While the overall national economic picture brightens in 2002, growth is not expected to be
more than 1 - 1.5% next year, well below the long-term trend line of 2 - 2.5%. By 2003, economic growth is expected
to be back above this trend line at a more robust level. Furthermore, estimates indicate that U.S. travel spending
will be reduced by more than $76 billion through the end of 2002.
For further information, please contact: Jeff Lustgarten or George McQuade, both of Cerrell Associates Inc., +1-323-466-3445,
for Southern California Association of Governments.
SOURCE: Southern California Association of Governments