The forecast was presented today by Cal State Northridge's San Fernando Valley Economic Research Center at the Economic Summit at the Sheraton Universal Hotel in Universal City. The center's director, economics professor Daniel Blake, worked with colleagues and students to compile a comprehensive look at the future of the economics of the Valley and the region through 2008.

The Economic Summit was sponsored by the Economic Alliance of the San Fernando Valley and California State University, Northridge.

"The Valley has moved from a recovery mode to a strong and sustainable growth path, with its strength coming from strong performances in the Valley's critical entertainment industry, and impressive growth in its large professional and business sector," Blake said.

Among the forecast's projections for the Valley over the next two years:

Job Growth: The Valley's strong job growth in the past several years will continue through 2008. Forecasters predict the private sector will add more than 10,700 new jobs in 2006 and the job creation will step up a notch in 2007 with an additional 12,300 jobs. Job growth is expected to moderate in 2008 with the addition of only 10,800 new private sector jobs.

While the outflow of jobs from the Valley's large manufacturing section is expected to stem during the forecast period, it will not stop. After losing more than 2,400 jobs in 2004 and nearly 1,900 jobs in 2005, the sector's losses will slow dramatically to just over 100 in 2006. Manufacturing job losses will continue for the remainder of the forecast period, but will stay in the hundreds of jobs per year rather than in the thousands.

Average Salaries and Total Earnings: Workers' fortunes are expected to improve over the next two years with average wages and salaries for all private sector employees growing at higher than average rates of 4 to 5 percent annually. The forecast calls for relatively improved rates of total payroll growth through 2008 as inflation-adjusted average wages and salaries grow at respectable rates and employment growth stays strong.

However, total earnings growth is expected to drop slightly below wage and salary growth throughout the forecast period. Total earnings will add 2.5 percent in 2006, 2.3 percent in 2007 and 2.2 percent in 2008. The slower growth is probably explained by the slower growth rate of public sector wages and salaries over the same period.

Consumer Spending: Retail sales are expected to return to a healthy 2 percent inflation-adjusted growth rate each year through 2008. The rate of retail trade expansion roughly matches the growth in real wages and salaries and total earnings and suggests that retail sales are returning to a normal expansion path.

Population and Net Migration: The Valley's population will continue to grow through 2008, though at a much slower rate than in the last several years. Last year, the Valley's natural increase was 13,400 and net in-migration to the Valley added just over 300 more people for an increase of 13,700 Valley residents. The forecast calls for the population increase of 15,000 to 16,000 each year in 2006 through 2008 with housing prices keeping much of the influx of people in check.

Real Estate: Valley home price appreciation slowed in the last year, but continues to remain in double digits fueled by a strong demand and meager supply. The forecast predicts that housing appreciation will slowly move into the single digits as the supply of houses on the market increases while higher mortgage rates quell demand.

Forecasters say the growth in demand for Valley housing will be fueled by the projected modest growth in the population from both natural increases and positive net in-migration to the area coupled with a modest growth in earnings. This moderating growth in housing demand, combined with the increased supply now coming onto the market and projected for the future, will keep housing prices in check.

"Valley home buyers should see relief this year from the recent home price spiral but Valley renters are beginning to feel the upward pressure on rents as displaced home buyers move into their market," Blake said.