Economic Reports & Forecasts 2002-2003 Summary of Changes
Valley job growth resumed last year after a virtual hiatus in 2000. Valley private-sector employment grew at a 1.9 percent rate in 2001 compared to a 0.2 percent rate in 2000. Valley private-sector payroll grew by a fairly healthy 5.7 percent in 2001, compared to 4.7 percent in 2000.
The Valley's private sector added 12,764 jobs in 2001, growing from an average of 656,678 jobs in 2000 to 669,442 jobs last year. Industrial growth trends are difficult to discern because of a change in industrial classification systems, but some industries that were largely unaffected by the switchover grew faster than the average 1.9 percent in the Valley, these include construction with a 4.5 percent increase, finance, insurance, and real estate with a 5.4 percent employment increase, and health care, with a 6.1 percent employment increase.
UI claims level hit eight-year highs in the Valley, Los Angeles County, and California in the first two quarters of 2002. Unemployment Insurance (UI) claims grew rapidly in the Valley during the last three quarters of 2001 and the first two quarters of 2002, as they did in both Los Angeles County and California. Normal seasonal patterns are expected to push UI claims lower in the months ahead, a trend that could be reinforced by a continuation of the recent job growth in the Valley.
Bankruptcy filings in the Valley remained relatively stable through the second quarter of 2002. Chapter 11 filings edged down slightly, Chapter 13 filings were stable, and Chapter 7 filings may have edged up slightly in the last few months. Chapter 7 filings have been influenced recently by pending legislation, which would tighten eligibility for this most lenient of bankruptcy filings, so their usefulness as an economic barometer has been diminished.
Industrial and commercial vacancy rates generally climbed throughout 2001 and into 2002 in response to the recession. Valley industrial vacancy rates moved to 5.0 percent in second quarter 2002, which compared favorably to the nation's 8.2 percent industrial vacancy rate for the same quarter. Valley commercial vacancy rates doubled from their low of 7.8 percent in fourth quarter 2000 to 15.6 percent in second quarter 2002, roughly comparable to the nation's vacancy rate of 15.2 percent.
Building permits rose sharply in the second quarter 2002, moving up nearly 60 percent from the four-year lows established in the previous two quarters. The building permit increase was reflected roughly equally in residential and nonresidential permits.
Home prices continued their sharp ascent with median prices rising to $320,000 and mean prices over $355,000. Home sales continued at a new record pace and inventories fell to a 2.1 months supply, down from a 2.8 months supply last year. In spite of the recession, both notices ofdefault and foreclosures remain stable to falling, suggesting that home appreciation maybe offsetting the usual effects of an economic slowdown on defaults and foreclosures.
Apartment vacancy rates in the Valley remain stuck below 3 percent, signaling a continuation of the very tight rental housing market. Moreover, vacancy rates among the various Valley communities have converged at these low rates, suggesting the rental market is tightest in the low-rent areas, which usually have higher turnover and therefore higher vacancy rates.
Valley imports grew slightly in 2001 while Valley exports fell. These trends in imports and exports (measured by weight) are consistent with the slow but positive growth in consumer spending, causing imports to rise a bit, and the general malaise in overseas economies, which reduced demand for exports.
Biotech employment in the Valley grew by 3 percent and payroll grew by nearly 20 percent, indicating that this small but growing sector is adding high-paying jobs to the Valley's economy. Entertainment activity dropped in the Valley in 2001 as it did elsewhere in Los Angeles County and California.
Entertainment Employment fell by 8.3 percent or 8,800 jobs in 2001 as a result of the strike threats of 2001 and the events of 9/11. In spite of this significant job loss, total entertainment payroll increased by 2.9 percent. Valley hospitals increased the number of licensed beds available and enjoyed higher occupancy rates in 2001, both trends increasing hospital revenues. Nonetheless, hospitals' costs rose faster than revenues, portending future moves to cut costs and enhance revenues.
Airport passenger traffic, hotel occupancy rates, and attendance at area theme parks are all down somewhat due to the events of 9/11. June 2002 airport passenger traffic is 4 percent off its June 2001 level, and Valley hotel occupancy rates for the first six months of 2002 average 3 percent below their 2001 levels. Theme park visits fell for Universal Studios, Disneyland, and Magic Mountain but rose for Knott's Berry Farm.
Slightly over half, 50.4 percent, of Valley housing was owner-occupied at the census date, according to Census 2000 data, and that average family size in the Valley was 3.5 persons. People over 65 years of age comprised 10.6 percent of the Valley's population while 26.2 percent of the population were under 18.
Some quality of life measures showed improvements and some did not. Air quality continued to improve by most measures but crime rates were stable or notched up slightly in 2001 after falling for most of the 1990s. Traffic congestion did not improve.
