Explaining Southern California's economy

Why we need NFL football back in LA – even if we don't want NFL football back in LA

There are currently two competing proposals to build new stadiums and bring the NFL back to L.A. (I've blogged about this a bit already). AEG, developer of the Staples Center, is behind the one that would install our gridiron heroes Downtown. Majestic Reality would build in City of Industry, to the east of the city. In order for either of these plans to get off the ground, an NFL team needs to commit to moving in. And if one does, we'll need to figure out where it will play while the stadium is being constructed.

The Rose Bowl is often mentioned, but there's resistance on that front. There's also a potential problem with using the Coliseum. The Pasadena Star-News nicely summarizes the conflicts

The Patt Morrison Show did a segment this week about whether a new L.A. NFL stadium would live up to economic expectations, in response to a review by the Legislative Analyst's Office that concluded that Los Angeles won't realize the promised benefits of the AEG project. I'm skeptical that any new stadium will really add up to a jobs bonanza -- entertainment spending isn't powerful enough to move the needle on an unemployment rate in L.A. County that's at 12.4 percent. But there are other reasons why we might want to go with the Downtown stadium (and I hasten to point out that I'm not picking sides here, just laying out what would happen if AEG gets the thumbs up):

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New Case-Shiller data shows that the Southern California housing market may be stabilizing

The June Case-Shiller numbers are out, and while prices in Los Angeles and San Diego are only up 0.3% and 0.2% from May, respectively, there are other parts of the nation where prices have cratered far worse, year-over-year. LA is down 3.4% from last June, while San Diego is down 5.3%. But Chicago is down 7.4% and Minneapolis, 10.8%. Phoenix and Portland are both down more than 9%. 

So it's looking like SoCal is beginning to put the brakes on the slide.

The big question is whether the very modest SoCal uptick will persist. At this point, teensy price increases over a few months could indicate that we're finally seeing the housing market stabilize. And the S&P/Case-Shiller analysis indicates that SoCal may be mounting a recovery that's not going to be dragged down by other hard-hit markets:

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Does a new econ guy in the White House mean a new hope for jobless California?

We can always hope so. Princeton economist Alan Kreuger was just nominated by President Obama to head the Council of Economic Advisers, the three-person team that provides know-how on the economy to the chief executive. 

This move has been taken as a sign that Obama intends to get serious about unemployment. As the LA Times' Opinion L.A. blog points out, Kreuger is known for his work on labor issues:

Perhaps the research most relevant to his new post…is the recent work he did with Andreas Mueller of Stockholm University examining the efforts by unemployed people to find new jobs. Among their findings: People spend less time looking for work each day the longer they are unemployed, but they don't lower their wage demands significantly over time. This is especially true for younger workers, for whom the long-term cost of a big cut in pay is more severe than for an older worker closer to retirement, the study found.

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Freebie Nights: Why the porn business in California is struggling

If you check in with porn-industry advocates, they'll probably tell you that the last thing the pornography industry needs right now -- from a business perspective -- is an HIV scare coupled with a 2012 ballot measure that would require condoms to be worn by performers. But an HIV scare it has gotten, one that's temporarily shut down porn production in LA, the nation's smut capital and creator of a reported $12.6 billion in yearly sales (the totally SFW map at right shows Chatsworth, the center of the region's porn industry).

This is happening at the same time the AIDS Healthcare Foundation is rounding up signatures to put a ballot measure in front of voters next June that would require condoms in porn media permitted for production in LA. On balance, this doesn't sound outlandish, but certain groups within the porn industry argue that mandatory condom use will create an underground non-condom trade that will be less safe. 

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Amazon is spending how much to fight a California sales tax?!?!

Over the weekend, the New York Times ran a story about Amazon's brisk spending on a 2012 referendum that would ask voters whether the state should be able to require the online retailer to collect sales tax. We're talking $5.25 million -- and as the NYT reports, we're more than nine months away from the actual vote.

The argument on the pro-tax side is that enforcing collection will bring in $200 million in revenue California "has already counted toward balancing the state budget." Obviously, down the road there's quite a bit more moolah at stake than that.

On the Amazon side, the argument has been framed in terms of jobs, but it's really about cash: Amazon figures it will do pretty well in California if it can sell people all manner of stuff for less than they can buy it from outfits that force them to pay the tax. Just for the record, the taxing part would occur at online checkout. Heretofore, it's been the responsibility of Amazon's California customers to pay the sales tax themselves -- and as you can imagine, that's a difficult responsibility for the state to enforce.

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