Southern California’s economy remains strong, but it’s expected to lag slightly behind the state through 2021, according to a new report.
As with other regions, housing affordability and a net migration inland pose challenges to growth and the efficient movement of people and goods, the Los Angeles County Economic Development Corp. forecast said.
On the plus side, per capita income growth is expected to continue to outpace the nation and state, buoyed by strong employment in the construction, logistics, professional services and healthcare industries.
Shannon Sedgwick, director of the LAEDC’s Institute for Applied Economics, which prepared the report, said the region has definite challenges.
“We have housing issues and a declining population,” she said. “With a decreased labor pool productivity remains low and that makes future economic growth difficult to achieve.”
Long-term regional investments in transportation — most notably the Southern California Optimized Rail Expansion — will help boost growth in the area, the report said. The $10 billion capital improvement program, which runs from 2018 through 2028, includes track additions, station improvements and better signals and grade crossings to improve safety where trains cross surface streets.
It’s projected to generate 1.3 million jobs and provide a $684 billion boost to Southern California’s economy.
The forecast expects the regional economy to expand by 1.8% this year and next year, well below the more robust growth the region saw in 2018 (3.1%), 2017 (3%) and 2015 (4.6%).
The biggest job gains
Southern California is expected to add 129,800 jobs this year and 128,300 in 2021. This year’s biggest employment gain of 52,500 jobs will come in education and health services, the report said, with other sizable increases in leisure and hospitality (20,600), professional and business services (18,900) trade, transportation and utilities (13,200) and construction, natural resources and mining (12,100).
Sedgewick noted that, while the region’s overall economy is still relatively good, many Southland residents are not earning a living wage.
“Twenty-five percent of households with children in L.A. County are receiving some form of public assistance,” she said.
Home values are out of reach for many and will continue to climb, largely as a result of the region’s limited inventory. Southern California’s median home price — the point at which half the homes cost more and half cost less — is expected to reach $593,111 this year, up from $589,249 in 2019, and it will rise to $606,649 next year, the report said.
The forecast also breaks out highlights for each county:
Los Angeles County
- Economic expansion: 1.8% this year and 1.6% in 2021
- Employment growth: 48,400 this year and 42,200 in 2021
- Unemployment rate: 4.3% this year and 4.1% in 2021
- Median home price: $658,339 this year and $674,463 in 2021
- Economic expansion: 1.7% this year and 2% in 2021
- Employment growth: 16,200 this year and 19,600 in 2021
- Unemployment rate: 2.7% this year and 2.6% in 2021
- Median home price: $745,385 this year and $764,271 in 2021
San Bernardino County
- Economic expansion: 2% this year and 1.8% in 2021
- Employment growth: 15,000 this year and 15,200 in 2021
- Unemployment rate: 3.9% this year and 3.8% in 2021
- Median home price: $380,640 this year and $394,179 in 2021
- Economic expansion: 2.3% this year and 2% in 2021
- Employment growth: 13,600 this year and 12,100 in 2021
- Unemployment rate: 4.3% this year and 4.2% in 2021
- Median home price: $390,548 this year and $403,761 in 2021
The report defines Southern California as a 10-county region that includes Los Angeles, Orange, San Bernardino, Riverside, San Diego, Ventura, Santa Barbara, Imperial, Kern and San Luis Obispo counties.
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