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Visitor Industry Outlook Conference

Regional Economic OutlookKimberly Ritter-Martinez, EconomistEconomist, Kyser Center for Economic ResearchOctober 13, 2015

The California and Southern California Economic Outlook

California

Southern California

The Housing Market

Forecast

The California Economy

Kyser Center for Economic Research

Economic Comparisons 2014 GDP

Los Angeles County21th Largest Economy $634.1 Billion GDP

Southern California

16th Largest Economy $1.0 Trillion GDP

California

8th Largest Economy $2.3 Trillion GDP

Largest Economy in the World $17.3 Trillion GDP

Source: BLS, LAEDC estimates

U.S. 5.1% CA 6.1%

Labor Markets in US & CA Nearly Healed

Source: US BLS, CA EDD Kyser Center for Economic Research

Unemployment Rate

August 2015: 36,300 Jobs m/m and 470,000 | 3.0% y/y

Month to month changes in thousands, seasonally adjusted

California Non-farm Job Growth

Source: CA EDD, Labor Market Information Division, SA

Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15

CA 3.0% US 2.0%

U.S. and California Annual Job Growth

Source: US BLS, CA EDD

August YTY % change in nonfarm jobs, seasonally adjusted

0.3%0.9%

1.5%1.7%

2.0%2.6%2.6%

3.1%3.1%

3.5%3.6%

Bakersfield (700)Ventura (2,600)

Modesto (2,400)Los Angeles (73,100)

Oakland (21,500)Sacramento (23,000)

Stockton (5,400)San Diego (41,500)

Inland Empire (40,700)Orange County (52,900)

Fresno (11,200)San Jose (54,700)

Job Trends by California Metro Area

Source: CA EDD, Labor Market Information Division

Annual percentage change in nonfarm jobs (SA)Metro Area (YTY Job Gain August)

California Employment Growth, 2016

-3.12.02.13.75.37.39.2

14.415.9

18.724.1

46.548.5

53.357.4

-15.0 5.0 25.0 45.0 65.0 85.0 105.0

Finance & InsuranceOther ServicesMgmt. of EnterprisesManufacturingReal Estate, Rental & LeasingEducational ServicesInformationGovernmentTransport. & UtilitiesWholesale TradeRetail TradeConstructionHealth Care & Social AsstLeisure & HospitalityProf, Sci & Tech SrvsAdmin. & Support Srvs

Source: CA EDD, Labor Market Information Division, forecast by LAEDC

Total nonfarm job growth forecast for 2016 (thousands): +386.4 jobs

The Southern California Economy

Source: CA EDD, Labor Market Information Division Kyser Center for Economic Research

Local Unemployment Rates

Los Angeles County (7.0%) Orange County (4.5%) Inland Empire (6.8%)Ventura County (5.8%) San Diego County (5.1%)

August 2015

L.A. 5-County Employment Growth, 2016

1.61.8

3.13.43.6

4.64.8

6.88.9

11.912.1

16.119.9

21.421.7

0.0 5.0 10.0 15.0 20.0 25.0 30.0

InformationFinance & InsuranceMgmt. of EnterprisesReal Estate, Rental & LeasingOther ServicesGovernmentManufacturingEducational ServicesWholesale TradeLeisure & HospitalityRetail TradeTransport. & UtilitiesProf, Sci & Tech SrvsAdmin. & Support SrvsConstructionHealth Care & Social Asst

Total nonfarm job growth forecast for 2016 (thousands): +168.0 jobs

L.A. 5-County Employment Growth, 2016

0.5%0.7%0.7%0.7%

1.4%1.4%1.5%

2.2%2.3%2.4%2.5%

3.0%3.7%

4.2%4.2%

5.4%7.0%

-1.0% 1.0% 3.0% 5.0% 7.0% 9.0% 11.0%

GovernmentInformationFinance & InsuranceManufacturingLeisure & HospitalityOther ServicesRetail TradeTotal Nonfarm EmploymentWholesale TradeHealth Care & Social AsstReal Estate, Rental & LeasingMgmt. of EnterprisesEducational ServicesAdmin. & Support SrvsProf, Sci & Tech SrvsTransport. & UtilitiesConstruction

Annual Percent Change

Total nonfarm job growth forecast for 2016, percent change: +2.2%

Job Trends by County in 2016

County Unemployment Rate

Nonfarm Jobs Added

YTY % ChangeNonfarm Jobs

Los Angeles 6.3% 77,700 1.8%

Orange 3.4% 41,700 2.7%

Inland Empire 5.8% 44,100 3.3%

Ventura 5.1% 4,500 1.5%

Source: CA EDD, Labor Market Information Division

Leisure & Hospitality Job Counts Reach New Record High

Source: California EDD

Ventura County

San Diego County

Inland Empire

Orange County

Los AngelesCounty

Thousands of jobs

Total Personal Income in SoCal

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015f 2016f

Los Angeles Orange Inland Empire San Diego Ventura

4.6%4.6%

4.4%2.4%6.5%5.8%

Annual Average, $Billions, % Annual Change

Source: US Bureau of Economic Analysis

7.2% 2.6%3.5% 2.2%-3.5%

Housing

Drivers: Job and income growth Net increases in wealth Demographics Expected increases in mortgage rates (near-term)

Constraints Down payment sources Rising mortgage rates (longer-term, affordability) Strict underwriting requirements

Housing Market Drivers & Constraints

10,000

12,000

Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15

Home SalesMedian Home Price

Home Sales & Median PricesLos Angeles County

New and existing, single-family homes and condosSales Price, Thousands

Source: California Real Estate Research Council; DataQuick

Apartment Rents – Southern California

Los Angeles Orange Riverside San Bernardino Ventura

Source: CA Real Estate Research Council

Source: US Census, C.A.R. Kyser Center for Economic Research

Homeownership Fundamentals

State CaliforniaSan

Francisco Los Angeles

Median Home Price $446,980 $1,247,570 $436,010

Price that Median Income Can Afford $304,490 $383,670 $275,530

Housing Affordability Index 30 10 30

Homeownership Rate (2009-13) 55.3% 36.6% 46.9%

Residential Building Permits Issued in Los Angeles County

11.7 11.9 10.1 7.53.5 2.1 2.4 2.4 2.8 3.6 4.4 4.9 6.8

15.2 13.7 16.3

3.5 5.0 8.0 8.012.8 14.3

19.422.9

'04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15f 16f

Multi-FamilySingle-Family

Permits issued, thousands

Source: CIRB, California Home Building Foundation, forecast by LAEDC

Housing Market Sales up over the year, inventories still tight

Modest price gains, some areas near peak

Rents in record territory, vacancy rates low

Homeowner’s equity building

Rates low but trending up, lending tight but easing somewhat

Housing affordability decreasing

Economic Forecast

California Five-Year Forecast

Forecast Source: IHS, LAEDC Kyser Center for Economic Research

2006-2010 2011-2015 2016-2020

GSP – Annual % Change 0.4% 2.3% 2.9%

Nonfarm Jobs Annual % Change -1.1% 2.5% 1.5%

Unemployment Rate 8.2% 9.0% 5.7%

Personal IncomeAnnual % Change 2.6% 5.3% 5.2%

Forecast Source: IHS, LAEDC Kyser Center for Economic Research

Annual Average

2006-2010 2011-2015 2016-2020

U.S. Housing Starts(Millions) 1.04 0.89 1.48

California Housing Permits(Thousands) 84.7 75.5 152.6

Housing & Construction Are Back (Finally!)

Forecast Source: LAEDC Kyser Center for Economic Research

Job Gains Advance at a Slower Pace

Nonfarm Jobs in Millions % Yr % Yr

2010 2015 2020 10-15 16-20

Los Angeles 3.89 4.32 4.52 2.1% 0.9%

Orange 1.37 1.55 1.67 2.5% 1.6%

Riverside-San Bernardino 1.14 1.34 1.51 3.1% 2.5%

Ventura 0.27 0.30 0.32 1.6% 1.4%

Forecast SummaryThe California Economy

State’s job gains continue to outpace the nation Unemployment rate drops below 6% Housing and construction up substantially; Strong gains in health care; business services, & leisure &

hospitality Improved fiscal outlook; water issues loom large

The Southern California Economy Private sector job gains, steady decline in unemployment rate Leading industries: construction; health care; goods movement

and business services Global weakness could hurt local manufacturing and exports

For Further Insight into the Local Economy

find our September Economic Forecast & Industry Outlook

online at www.LAEDC.org/reports

• Keep up with economic news and major developments by

subscribing to e-EDGE, our free weekly economic

newsletter. Check out the current issue at

www.LAEDC.org/eEdge

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