KPCC's business analyst Mark Lacter tells us about the stories to watch across the Southland in 2013.
Steve Julian: The year has changed, so what about our economic outlook? Mark, what do you see as you gaze into the New Year, clear skies or stormy ones?
Mark Lacter: Well, most everything is predicated on Washington getting its act together. And even with an agreement on taxes, which the House still has to vote on, there's a potential debt ceiling crisis in a few weeks. That's why economists are concerned - it's not so much the fiscal impasse, which was really artificially induced, it's the tendency to press the pause button whenever the word crisis comes up. So, someone who wants to buy a new house or hire more workers might have second thoughts. And yet, Wall Street finished out the year with a 166-point gain on the Dow and just a slight drop for the month of December - despite all the gloomy news.
Julian: That's kind of reassuring. It seems that the markets might be getting used to the gridlock between the House GOP and the White House.
Lacter: Let’s just say that expectations have been lowered – and that’s why the economy might not be tied to what Washington does or doesn’t do. The housing market, in particular, should be back on track in Southern California, with an increase in sales and, more importantly, an increase in the number of homeowners willing to put their property on the market. In the last few months of 2012, there were plenty of buyers but not enough sellers. Car sales should also be strong – following up on what was a really good 2012. Part of that is due to pent-up demand, what with folks finally making car purchases after holding back the last few years.
Julian: What about jobs?
Lacter: Well, so much depends on the overall U.S. economy. But California outpaced the nation as a whole in job growth, with the November unemployment rate falling below 10 percent for the first time in almost four years, and L.A. County's jobless rate not far behind. It was a faster drop than economists had expected, though the improvement was uneven. Hiring was strongest in the Bay Area and tended to focus on - what else - technology jobs, but there was some movement in places like the Inland Empire. Still, lots of long-term unemployed, which is a huge problem.
Julian: Whatever happens to the economy, this will be a busy year of machinations in LA city politics.
Lacter: That’s right – L.A. gets a new mayor, plus a few council members, a controller, and a city attorney. One thing that's not likely to change is the city's budget trouble, which is the result of too little money coming in and too much money going out - much of it pension and health care benefits for city workers. Now, voters will be considering a half-cent sales tax increase on the March ballot as a way of narrowing the deficit. That would bring the total sales tax to nine-and-a-half percent, but the added revenue won't close up the entire shortfall. And this isn’t a short-term fix. Pension obligations will eat into the city's budget for many years to come, and that could result in a further drop-off in services. City officials don’t seem capable of making the tough decisions – kind of like Washington.
Julian: Back to your crystal ball: what other stories should we should be watching?
Lacter: You should watch for any developments on an NFL franchise, and with it an NFL stadium. Normally, the period right after the Super Bowl is when team owners notify the league about the possibility of selling or relocating. So far, there's no indication that anyone is seriously looking at L.A., and even if there were interest, the process could get complicated because Anschutz Entertainment Group, which wants to develop a downtown stadium and possibly purchase a team, is up for sale - and there's no telling how the new owner of AEG might deal with the NFL situation. And finally, there's the future of the Los Angeles Times. The paper's owner, Tribune Co., finally came out of bankruptcy after four years, and now the question is when the new owners will start entertaining offers for the paper. There have been reports that Rupert Murdoch is interested, but the Tribune board might hold off for a while. Hey Steve, it's only January 1st - we've got a ways to go.
Mark Lacter is a contributing writer for Los Angeles Magazine and writes the business blog at LA Observed.com.