Explaining Southern California's economy

Job growth weakens nationally, but that doesn't mean bad news for Los Angeles

Mark Ralston/AFP/Getty Images

Unemployed Americans line up to enter a job fair in El Monte. In March, the U.S. economy added only 88,000 new jobs.

The U.S. economy added a disappointing 88,000 new jobs in March, the Labor Department reported on Friday. The headline unemployment rate dropped to 7.6 percent from 7.7, but the labor participation rate—the number of people who are actually working or trying to work—fell to its lowest level since the late 1970s, when the economy was mired in deep recession.

The weak March number—economists had expected something between 150-200,000—was contrasted by upward revisions to both January and March that showed the economy adding 61,000 more jobs in those months than previously thought.

"There's always hope that we'll see the March numbers revised up," said Kimberly Ritter-Martinez, an economist at the Los Angeles County Economic Development Corporation. "But at the same time, you shouldn't read too much into a one-month report. And the upward jobs growth trend is still intact."

She added that the California and Los Angeles economies have been adding jobs at a faster rate of growth than the national as a whole, a trend that has persisted for some time. But Ritter-Martinez noted that since the state and the Southern California region fell into a much deeper hole during the Great Recession, it's taking both longer to climb out. 

California's unemployment rate is at 9.6 percent and L.A.'s metro area stands at 10 percent.

Ritter-Martinez also expect the regional jobs trend to remain intact, but neither she nor her colleagues anticipate spectacular local economic growth. 

Some parts of the Southern California did see decent jobs gains, based on the national data. 

"We did point out growth in motion pictures and sound recording," she said, highlighting two important parts of the L.A.-based entertainment industry that saw a jobs boost of over 10 percent compared with last March.

Job growth in warehousing was also notable, Ritter-Martinez said, as was construction. 

"We've been seeing pretty strong gains in construction locally, and we'll continue too see that," she said. "We're forecasting pretty strong gains both for the state and locally in 2013."

So what caused the March jobs numbers to come in so weak? Ritter-Martinez pointed to a huge drop in the retail sector—a loss of 24,000 jobs in March, versus an average of 32,000 jobs added over the past six months—that could be the result of the increase in payroll taxes at the beginning of the year, constraining Americans' desire to hit the malls and spend.

The pain of sequestration cuts also hit in March. 

Ritter-Martinez and her fellow LAEDC economists continue to expect tepid economic growth for the first half of 2013. But that pessimism is temporary.

"We're expecting growth and employment to pick up," she said. And the LAEDC isn't forecasting that the economy will contract in 2013.

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