Economic Reports & Forecasts 2001-2002 Summary of Changes
The Valley economy is still growing although it is showing clear signs of a slowdown following two years of strong growth. The economic slowdown is relatively widespread, but some parts of the Valley economy continue to enjoy healthy growth.
Employment in the Valley's private sector totaled nearly 657,000 jobs in 2000, but private employment grew only 0.2 percent between 1999 and 2000, compared to 3.5 percent in 1999 and 1.9 percent in 1998.
The stronger growth sectors of the economy seemed to be directly tied housing and Valley residents' spending patterns. Construction employment grew 5.4 percent and agriculture (largely landscaping and nurseries) grew 6.4 percent. Retail trade grew nearly 2 percent and was particularly strong in building materials and garden supplies (+6.2%), new and used cars (+6.2%), furniture and home furnishing (+11.6%), and apparel and accessory stores (+7.3%). Employment in personal services grew 5.2 percent and health service jobs increased by 2.8 percent including a rise in nursing and personal care facilities of 25.9 percent.
Two large business service areas - temporary help services and engineering and management services - declined by double-digit percentages and caused the Valley economy's dominant services sector to lose 0.5 percent of its jobs in spite of growth in many other service industries. Insurance and real estate shed roughly 1,500 jobs in the Valley and, even though financial institutions' employment grew by 9 percent, the finance, insurance and real estate sector lost 1.5 percent of its jobs.
Valley manufacturing employment grew by 0.2 percent due to the expansion of technology-based manufacturing by 0.7 percent, even though general manufacturing lost 0.9 percent of its jobs.
Unemployment claims continued to fall in the Valley throughout 2000 and the first quarter of 2001 in spite of the slowdown in job growth. Not until the second quarter of 2001 did unemployment claims start to rise above their seasonally-adjusted low levels.
Bankruptcy rates in the Valley remain low and stable based on Chapter 11 and 13 filings. A spike in Chapter 7 filings occurring in early in 2001 was more closely associated with a Congressional legislation intended to discourage Chapter 13 filings (which allow for consumer debt forgiveness) than with economic events.
Valley industrial vacancy rates moved down to historically low levels in the fourth quarter of 2000 and first quarter of 2001, but edged up the second quarter. Nonetheless, the second quarter industrial vacancy rate at 4 percent remains below levels experienced in earlier quarters and is less than two-thirds of the national rate. Office vacancy rates are up from the lows achieved in 2000 but remain below the levels experienced in the previous years and below the national rate.
While construction employment remains strong, building permits - indicative of future construction activity - peaked in the first quarter of 2000 at $530 million, and have continued to decline to the $350 million level in the second quarter of 2001. The last quarter shows an upturn in non-residential permit activity, but it was not sufficient to offset the decline in residential permit values.
Apartment vacancies continued to decline in the Valley with the lower rent areas experiencing the steepest declines. These trends suggest a very tight rental housing market, particularly on the low-rent end.
The owner-occupied housing market continues to show remarkable strength with housing prices hitting an all-time high and the existing inventory moving to a decade low, at a monthly listings-to-sales ratio of 2.8. The seller's market has moved residential foreclosures rates to low levels not experienced since the early 1990s.
Imports and exports (measured by weight) both increased significantly in 2000 relative to 1999, when exports and imports had slumped relative to recent years. In 2000, both exports and imports stood at their highest levels in recent years.
Entertainment production and distribution, one of the Valley's most visible and important industries, added 1.5 percent more jobs to its rolls in 2000. This growth rate was not as large as it was in 1999, but it was greater than the growth in the industry in 1997 and 1998 combined. Also the Valley's entertainment industry claimed a higher percentage of the County's entertainment jobs in 2000 than in any previous year.
The Valley biotechnology industry is a small but potent. It claims only 2.7 percent of private-sector employment in the Valley but has grown by over 26 percent in the last 4 years, and its salaries are 25 percent higher than the Valley average.
Tourism and amusement park attendance were strong in 2000 with the strong economy and the Democratic Convention in August. Valley hotel occupancy rates in early 2001 were up from 12 months ago, but slightly off their end-of-the-year peak.
There is a large social sector in the Valley served by more than 3,300 nonprofit organizations. Many are small with budgets under $25,000 annually, but more than 200 have budgets of over $1 million and 18 have annual budgets over $20 million.
The Valley's population is growing and growing more diverse. The population grew by 10.7 percent between 1990 and 2000, with the Hispanic component growing by 43 percent, Asian Pacific population by 26 percent, and African Americans by 17 percent, while the white population declined by 5 percent.
Public school enrollments fell in the Los Angeles Unified schools in the Valley but were stable or growing in the other public school districts.
Valley crime rates have stabilized at their lowest levels after several years of decline.
Air pollution monitoring in the Valley indicates that the level of the major air pollutants decreased during the most recent period.
Freeway traffic volume has continued to grow in areas of the Valley that had lower volume levels, and remained high on the already congested routes.
