KPCC's business analyst Mark Lacter says we'll be getting some clues about the economy this week from the Federal Reserve.
Susanne Whatley: Mark, is this going to be a big deal?
Mark Lacter: Certainly not compared with last year, Susanne, when there was a presidential election and almost every jobs report took on a life of its own. These days, the economy isn't making front-page news because it's not been very newsy - just chugging along with incremental improvements, but not the kind of breakout recovery that often happens following a recession. You know, we're stuck in a kind of "yes, but…" stage. In California, job growth is outpacing almost every other state in the nation, but - as of April - it still has the fourth-highest unemployment rate in the nation (the May numbers are coming out later this week). As for housing, May home prices jumped almost 32 percent from a year earlier - the biggest year-over-year jump since 1980. Huge numbers. But, there are way too many buyers and not enough sellers, which means that inventory levels keep falling.
Whatley: I guess that means bidding wars…
Lacter: That's right - and, it leaves out lots of folks who want to finance because too many buyers are willing to pay all cash. So, while the market is coming back, there isn't a healthy balance of buyers and sellers. I'm sounding a little like Roseanne Rosannadanna - it's always something.
Whatley: What about the Federal Reserve pumping so much money into the financial system?
Lacter: That's one reason that the stock market has been doing so well, which is one reason the California budget has been helped along. But, the Fed can't keep pumping forever, which has folks concerned about what happens when - and to what degree - the stimulus measures are cut back (we might get some clues when they meet this week). And, there's sequestration - remember that? Washington was being forced to cut back severely, and it was supposed to affect government spending at all levels. Well, so far the effects on the overall economy have been modest.
Whatley: Any idea why?
Lacter: Possibly because the private sector has been doing quite well (people are buying cars, taking vacations, the stores are crowded). Maybe it'll stay that way, maybe it won't. The point is there's just enough uncertainty for the recovery to be less than full throttle - and that's why you're seeing growth that's good - but not great - and that's why the economy has become a pretty dull story.
Whatley: Speaking of low profile, what about the city of L.A. merging two of its most important departments?
Lacter: One of the most important proposals in years, Susanne, and very few people are paying attention. The idea is to merge the city of L.A. Planning Department with the Department of Building and Safety. It's a move that supporters believe will streamline development - what's often a frustrating process, and one of the reasons L.A. is considered unfriendly towards business. City officials are holding off until early next year to work out the details, of which there are many.
Whatley: What's the real advantage to merging the two?
Lacter: Well, city departments don't have a great history of working well together. The problem, in this case, is that these two departments serve very different purposes - the Planning Department is geared more towards projects as they relate to overall public policy, and Building and Safety is the enforcer of rules and regulations. You could just imagine the turf wars of having one side of the department signing off on a project, and another side putting up all sorts of roadblocks.
Whatley: Sounds like two departments with different missions.
Lacter: That's right - real answer, it seems, is not just joining two departments, but coming up with more efficient ways of processing applications. If it keeps taking months - or even years - for a business owner to expand in the city of L.A., it won't much matter what your organizational chart looks like. It'll still be a mess.
Mark Lacter is a contributing writer for Los Angeles Magazine and writes the business blog at LA Observed.com.