“In the Heart of the Storm” Cerritos College 11 th Annual Advisory Committee Member Recognition Breakfast Jack Kyser Sr. VP & Founding Economist, The Kyser Center for Economic Research, LAEDC Thursday April 30, 2009

The U.S., California & Southern California are in a Recession  How much longer will it last?  What type of recovery will we see?  Impact of Federal Stimulus & State Budget

Jobless Rates High & Rising Sources: BLS, CA EDD Percent Unemployed (SA)

Job Counts Dropping Fast Sources: Bureau of Labor Statistics, CA EDD

Source: BEA

U.S Housing Starts Are Down 000s of Dwelling Units Source: U.S. Census Bureau, forecast by LAEDC

Tracking Retail Sales Source: US Census Bureau Year-Over-Year % Change

Spot Energy Prices $/ Mcf $/Barrel Sources: EIA, Natural Gas Weekly Latest Month Plotted: Feb 2009

Interest Rates 4 th Quarter Averages %

U.S. Economic Growth % Change in Real GDP, Year-Over-Year Sources: BEA, forecasts by LAEDC

Risks to the Forecast  Upside: Lower energy prices/costs  Downside: Bank lending constraints The length and depth of the housing and automotive downturns “Fear”

Global Growth Retreats Annual % Change Source: IMF (Jan., 2009)

California Fundamentals Unemployment Rate Change in Nonfarm Jobs Year/Year (000s) Source: California Employment Development Dept. March 2009 NSA

Source: California Employment Development Dept; forecasts by LAEDC Industry Winners and Losers--California Total Change: Year-Year Change in Average Employment (000s)

Job Growth by Metro Areas Nonfarm Numerical Employment Change in Thousands March ’08 -’09 Sources: CA EDD, Labor Market Information Division

CALIFORNIA HOUSING MARKET

Source: California Association of REALTORS® Median Home Price--California Thousands of $ $247,590 February ‘09 Down -58.2% from May ’07 (peak)

Risks for the California Economy Local government finance Water supply Unfriendly business environment

Los Angeles County Fundamentals Unemployment Rate Change in Nonfarm Jobs Year/Year (000s) Source: California Employment Development Dept. March 2009

2009 Industry Winners & Losers in Los Angeles County Sources: CA EDD, Labor Market Information Division; forecasts by LAEDC Total Nonfarm: Jobs 1000’s

Some Industry Trends Los Angeles County

LA County Aerospace Industry Changing Defense spending priorities More orders for the C-17? Aging workforce No Change in Employment in 2009 Employment in Thousands Source: CA EDD, LMID

LA County Financial Services Industry New regulations Changed players in retail banking Letter Grade C- Employment in Thousands Source: CA EDD, LMID

LA County International Trade Recovery in 2010? New Port Facilities Environmental challenges Hungry competitors Letter Grade C- TEUs in Millions Sources: Ports of Los Angeles & Long Beach, forecasts by LAEDC

LA County Motion Picture/ TV Production Labor problems Run-away production A changing business model in broadcast TV Letter Grade B- Employment in Thousands Source: CA EDD, LMID

LA County Tourism Industry Business & international travel down New facilities in early 2010 Too many CVBs Letter Grade C+ Employment in Thousands Source: CA EDD, LMID

Housing Permits in Los Angeles County Sources: Construction Industry Research Board; forecast by LAEDC

Los Angeles County Housing Market Sources: RERC (DataQuick)

New Home Inventory New Home Inventory — LA County — Number of Unsold New Homes Source: RERC

Los Angeles County Apartment Vacancy Rates & Average Rental Rates Source: RERC % $

Office Vacancy Rates Los Angeles County By Area Percent vacant, quarterly averages Source: Grubb & Ellis Research Services 2009: Q1

Industrial Vacancy Rates Los Angeles County By Area Percent vacant, quarterly averages Year: Quarter Source: Grubb & Ellis Research Services 2009: Q1

Taxable Retail Sales in Los Angeles County Source: State Board of Equalization (BOE) %

Los Angeles County Employment Forecast Source: California EDD; forecast by LAEDC %

Risks for the LA County Economy No economic development strategy Government agencies frequently unfriendly to business A target for business raiders from other states Which industries changed due to the great recession?

Employment Trends in North Gateway Source: California Employment Development Dept (EDD) Total Employment in Thousands

Source: California Employment Development Dept (EDD) Industry Performance for the North Gateway Region Change in Employment by Industry from Q to Q2 2008

Changed Industries: A Short List Autos: Dealers Local aftermarket industry Business Services: Advertising – shift in reaching consumers Entertainment: Change in broadcast TV International Trade/Logistics: “Near-shoring” – how real Retail:Squeezing out excess capacity Future of luxury/near-luxury segments

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