Explaining Southern California's economy

No investment-banker mayor for L.A.: Austin Beutner drops out

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Mark Sullivan/Getty Images for The Broad Stage

Austin Beutner on stage during the preview of The Broad Stage 2010-2011 schedule. The former investment banker and deputy mayor dropped out of the race for mayor of L.A. today.

Austin Beutner, the retired investment banker who was running for mayor of Los Angeles but who wasn't polling anywhere near other candidates or raising as much money, has dropped out of the race. Our new politics blogger, Alice Walton, has the lowdown. His stated explanation is that he wants to refocus on his family. This is from the statement his campaign released earlier today:

I have decided to withdraw from the Los Angeles Mayoral Race.  While everything I’ve learned exploring the possibility has reinforced my view of how much our city needs leadership who will solve problems, it has also reminded me of my responsibilities as a husband and father.  My family has been my biggest supporter in this effort, but my own needs at this time are for me to be engaged with my family in a way which is at odds with the demands of a campaign.

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Why are we so worried about L.A.'s budget deficit?

"No Labels" Political Organization Launches As Counterpoint To Tea Party

Spencer Platt/Getty Images

Los Angeles Mayor Antonio Villaraigosa has budget issues.

There's a general sense of hysteria — including the use of the "b" world (bankruptcy) — over Los Angeles' estimated $222-million budget deficit. Everyone seems very, very worried. The future looks even more grim, as the deficit is expected to rise to $427 million by 2014-15. There's abundant hang-wringing going on. But is $222 million really that big a deal?

The overall budget is about $7 billion. The deficit is less than 3 percent of that total. For comparison, New York City is running a deficit on a $70-billion budget that's more than double that of L.A. — and the Big Apple is delighted that it can reduce that to L.A. levels. 

Miguel Santana, the Chief Administrative Officer, actually has a plan to close most of L.A.'s budget gap. This is from the L.A. Times:

Santana says about $150 million in new revenue is needed. Doubling the so-called documentary transfer tax imposed on the sale of property could bring an additional $100 million, he said. Raising the parking tax by 10% to 15% would bring in $40 million. Additional revenue could come from improved collection of parking ticket fees and ambulance billing, he said.

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Jobs, jobs, jobs: California unemployment rate falls

Unemployment Rate Drops To 8.3 Percent

Kevork Djansezian/Getty Images

George Hernandez looks at job openings at the Foothill Employment and Training Connection on February 3, 2012 in Pasadena, California.

A solid national jobs report this morning — 227,000 new jobs added, unemployment rate steady at 8.3 percent — was followed by a psychologically significant California report, from the state's Employment Development Department. At long last, we're below 11 percent — 10.9 to be exact, for January 2012.

Bear in mind that 10.9 percent is still much higher than the national rate. In Los Angeles, it's even higher, at 11.6 percent (that's the December 2011 number). Still, the overall trend is down. After a rough 2011, we can start to feel better about the economy's momentum.

Importantly, in California we're beginning to see signs of a recovery in the housing sector. Home sales and home buildings appear to be picking up, although it's still unclear whether prices have bottomed. The market continues to be out of whack and could take another four or five years to normalize. But improvements showed up nationally and at the state level, as construction added jobs. The pace is slow, but the direction is positive.

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Super Bowl ads: Great for Los Angeles, but it's still all about TV

The L.A. Times' Meg James has a great piece today about how a kind of advertising-tech axis is developing in Los Angeles, combining our resurgent ad agencies and all the new tech firms that have sprung up on the Westside and that are being called "Silicon Beach." (There was a Silicon Beach of sorts back during the 1990s dotcom boom, so this isn't so much a completely new thing as a reboot.)

Nowhere can this be seen more clearly than in the much-anticipated ads for the Super Bowl. Here's some salient language:

More than 110 million people are expected to watch the Super Bowl on TV, making it the biggest advertising event of the year. The pressure to perform is intense. Broadcaster NBC has charged a record $3.5 million for each 30-second spot. The commercials, which can cost an additional $2 million to make, will be analyzed and replayed as much as the action on the field. More than 20 of the high-profile commercials, including those promoting Hollywood films, were created locally.

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How to save America: Build better cities

Expo Park/USC Station

Courtesy of the Los Angeles County Metropolitan Transportation Authority

Expo Park/USC Station.

Felix Salmon has an interesting post today about how China has managed to keep it together depsite very trying economic times. The bottom line? Healthy investment in urban infrastructure. Which has fueled a boom in the creation of service-related jobs — just what you want if you need to think long-term about moving your economy away from agriculture and manufacturing. 

Cities, therefore, are good. Of course, China can do fine with a mix of agricultural and manufacturing labor at its core, with services a distant dream. The U.S., on the other hand, needs to push for service employment, as that's where the high incomes are. And we need high-income jobs to define America's future. Felix offers his formulation for how to get them:

How do you create service-industry jobs? By investing in cities and inter-city infrastructure like smart grids and high-speed rail. Services flourish where people are close together and can interact easily with the maximum number of people. If we want to create jobs in America, we should look to services, rather than the manufacturing sector. And while it’s hard to create those jobs directly, you can definitely try to do it indirectly, by building the platforms on which those jobs are built. They’re called cities. And America is, sadly, very bad at keeping its cities modern and flourishing. 1950s-era suburbia won’t cut it any more. But who in government is going to embrace our urban future?

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