California will continue to add jobs in 2014, growing its employment base by 2.1 percent from last year, according to a new economic report released Tuesday.
The report, called 'Forecast LA', said the state is moving in the right direction, already adding more than two thirds of nearly 1.4 million jobs lost during the Great Recession. The report was produced through a partnership between Loyola Marymount University and Beacon Economics.
“Today, the fundamentals (of California’s economy) have improved,” said Christopher Thornberg, a founding partner at Beacon Economics. “They are very much looking up.”
The state added jobs last year in areas like leisure and hospitality, construction and management, according to Forecast LA. Tourism picked up in the state, reaching more than 42 million visitors last year in Los Angeles—setting a new record. Hotels in L.A. had a 77 percent occupancy rate from September to November 2013, compared to the same period a year earlier, according to the forecast.
The housing market has also shown improvement. The median price on a California home increased 21 percent in the fourth quarter of 2013 from the same period in the prior year, with the most growth coming from areas like the eastern part of the San Francisco Bay Area, Sacramento and Inland Empire, the forecast said.
However, according to L.A. County residents and mayors surveyed for Forecast LA, prices have been out of reach for homebuyers. 83 percent of residents believe most residents can’t afford a home in their city or area, the forecast stated.
In the City of Downey, Mayor Fernando Vasquez said that in the late 1990’s, the city took a hit after Boeing closed its plant there and since, the city has been transforming itself as a place for healthcare jobs. Three of the area’s largest hospitals call Downey home—Kaiser Permanente, Downey Regional Medical Center and Rancho Los Amigos, he said.
“We need to create jobs to allow people to (have) disposable incomes in their pockets to afford homes in their city,” Vasquez said.
Dispelling some schools of thought
The forecast dispelled what other economists point out as a disparity in the economic recovery between the coastal communities and the inland regions. Thornberg said the California city that added the most jobs from fourth quarter 2007 to fourth quarter 2013 was Bakersfield, due to the growth in oil drilling.
Thornberg also said the area’s entertainment industry is alive and doing well, and dismissed suggestions that the state increase its tax credits for film and TV shows in order to keep more production jobs here. He said California has over twice the amount of workers in the entertainment industry than New York City.
“In general, the government should stop trying to industry pick,” Thornberg said. “When the industry puts its hand out and says, ‘Give me money or else, I say we call that bluff.’”
The forecast said "permitted production days" increased 10 percent from 2012 to 2013, although the bulk of the increase in recent years was due to “lower value” productions, such as reality television shows.
L.A. County’s economy still faces challenges
Forecast LA comes after the 2020 Commission released a report in January that was critical the City of L.A.’s finances. The 2020 Commission found that Los Angeles was the only metropolitan area out of the nation’s eight largest that recorded "net down jobs" since 1990, said Austin Beutner, who is co-chair of the commission and spoke at a Forecast LA event on Tuesday. Beutner also noted that the Los Angeles area ports are handling less traffic compared to 15 years ago and that foreign tourism to Los Angeles has remained flat.
“The emphasis has to be on growing jobs in the region,” Beutner said. “I don’t care how optimistic you are, the future will only be bright if we find a way to grow jobs and add to the tax base."
Despite its rosier outlook, the Forecast LA found there are still issues surrounding the state and local economy. The forecast points out that California remains a high tax state for businesses and the regulatory environment can be tough toward new construction and manufacturing.
This story has been updated.