February 15 a unique approach. critical answers. Accurate. 1 © 2015 UCLA Anderson Forecast. All rights Reserved a unique approach. critical answers. Accurate. Los Angeles Economic Outlook To the Controller of City of Los Angeles February 17, 2015 William Yu Economist UCLA Anderson Forecast

February 15 a unique approach. critical answers. Accurate. 2 © 2015 UCLA Anderson Forecast. All rights Reserved. L.A.’s payroll employment % change from 2007m12 to 2014m12 L.A. Nonfarm Employment Growth Forecast: 2015: 1.9% 2016: 2.1% L.A. Nonfarm Employment Growth Forecast: 2015: 1.9% 2016: 2.1%

February 15 a unique approach. critical answers. Accurate. 3 © 2015 UCLA Anderson Forecast. All rights Reserved. L.A.’s household employment % change from 2007m12 to 2014m12

February 15 a unique approach. critical answers. Accurate. 4 © 2015 UCLA Anderson Forecast. All rights Reserved. Unemployment rates L.A. Unemployment Rate Forecast: 2015: 7.2% 2016: 6.3% L.A. Unemployment Rate Forecast: 2015: 7.2% 2016: 6.3%

February 15 a unique approach. critical answers. Accurate. 5 © 2015 UCLA Anderson Forecast. All rights Reserved. Nonfarm payroll employment % change from 1990 to 2014 for 40 largest metros

February 15 a unique approach. critical answers. Accurate. 6 © 2015 UCLA Anderson Forecast. All rights Reserved. Nonfarm payroll employment % change from 1990 to 2014 for 10 selected metros

February 15 a unique approach. critical answers. Accurate. 7 © 2015 UCLA Anderson Forecast. All rights Reserved. Uneven job growth in Los Angeles County from 2007m12 to 2014m12

February 15 a unique approach. critical answers. Accurate. 8 © 2015 UCLA Anderson Forecast. All rights Reserved. L.A. County’s real personal income % change from 1990 to % 2.2% per year + 64% 2.2% per year + 62% 2.1% per year + 62% 2.1% per year + 39% 1.4% per year + 39% 1.4% per year L.A. Inflation Forecast: 2015: 0.8% 2016: 2.3% L.A. Inflation Forecast: 2015: 0.8% 2016: 2.3%

February 15 a unique approach. critical answers. Accurate. 9 © 2015 UCLA Anderson Forecast. All rights Reserved. L.A.’s nominal taxable sales % change from 1997Q1 to 2013Q3 CA: + 77% 3.6% per year CA: + 77% 3.6% per year LA: + 65% 3.2% per year LA: + 65% 3.2% per year L.A. Nominal Taxable Sales Growth Forecast: 2015: 2.8% 2016: 4.4% L.A. Nominal Taxable Sales Growth Forecast: 2015: 2.8% 2016: 4.4%

February 15 a unique approach. critical answers. Accurate. 10 © 2015 UCLA Anderson Forecast. All rights Reserved. L.A. metro’s home prices from 2011m12 to 2014m11 Source: Case-Shiller Home Price Index, L.A. Metro area (including both L.A. County and Orange County), 2011m12=100 L.A. Nominal Home Price Forecast: 2015: +6% [+3%, +10%] L.A. Nominal Home Price Forecast: 2015: +6% [+3%, +10%]

February 15 a unique approach. critical answers. Accurate. 11 © 2015 UCLA Anderson Forecast. All rights Reserved. L.A. County’s residential building permits from 1991 to 2014

February 15 a unique approach. critical answers. Accurate. 12 © 2015 UCLA Anderson Forecast. All rights Reserved. L.A. seaports’ exports and imports

February 15 a unique approach. critical answers. Accurate. 13 © 2015 UCLA Anderson Forecast. All rights Reserved First 5 LA/UCLA City Human Capital Index (CHCI) for 30 largest metros

February 15 a unique approach. critical answers. Accurate. 14 © 2015 UCLA Anderson Forecast. All rights Reserved First 5 LA/UCLA City Human Capital Index (CHCI) by zipcodes

February 15 a unique approach. critical answers. Accurate. 15 © 2015 UCLA Anderson Forecast. All rights Reserved CHCI Top 1/3 CHCI: Prosperous L.A.Bottom 1/3 CHCI: Lagging L.A.

February 15 a unique approach. critical answers. Accurate. 16 © 2015 UCLA Anderson Forecast. All rights Reserved. L.A. is the most congested metro among 40 largest metros in the U.S. Source: INRIX Congestion Index ( INRIX Index: 31.2 Among 219 worst corridors, 2 nd worst one is I-10: INRIX Index is rd worst one is I-405: INRIX Index is 230 Among 219 worst corridors, 2 nd worst one is I-10: INRIX Index is rd worst one is I-405: INRIX Index is 230

February 15 a unique approach. critical answers. Accurate. 17 © 2015 UCLA Anderson Forecast. All rights Reserved Housing affordability index for the nation and major metros

February 15 a unique approach. critical answers. Accurate. 18 © 2015 UCLA Anderson Forecast. All rights Reserved. Ratio of home units built after 2000 to all units for 35 largest metros Source: year American Community Survey 34 % 28 % 25 % 19 % 17 % 13 % 10 % 9.2 % 8.9 % 8.2 % 7.4 % 7.4 % 7.3 %

February 15 a unique approach. critical answers. Accurate. 19 © 2015 UCLA Anderson Forecast. All rights Reserved. Wage distribution in Los Angeles County Current minimum wage ($9) cover 9.9% of LA workforce Minimum wage ($13.25) in 2017 is expected to cover 28% of LA workforce Minimum wage ($15) in 2017 is expected to cover 34% of LA workforce Current minimum wage ($9) cover 9.9% of LA workforce Minimum wage ($13.25) in 2017 is expected to cover 28% of LA workforce Minimum wage ($15) in 2017 is expected to cover 34% of LA workforce

February 15 a unique approach. critical answers. Accurate. 20 © 2015 UCLA Anderson Forecast. All rights Reserved. Conclusions L.A.’s real personal income will grow 4% in 2015 and 2.9% in L.A.’s inflation rate will be 0.8% in 2015 and 2.3% in L.A.’s nominal taxable sales will grow 2.8% in 2015 and 4.4% in In the long run, L.A. has to improve its low level of human capital in order to achieve shared prosperity. L.A. has not supplied sufficient homes to meet the demand. A higher-density L.A. could partly solve its expensive home price problem and create a shared prosperous economy for the next generation.