Economic forecast: More businesses entering California than leaving, report finds
We hear often about companies fleeing Los Angeles in droves — scared away by excessive regulation and too high a cost of doing business.
A little over a year ago, Toyota struck a blow to Torrance, announcing it was moving 3,000 jobs to Plano, Texas.
"Toyota move to Texas is latest blow to Southern California," proclaimed Reuters. "California Leavin': This State Is in a State of Denial," wrote the conservative commentator, Stephen Moore.
Companies leaving is never good news, but Toyota wasn’t representative of a larger trend. It was the outlier, according to a new report from Beacon Economics.
“More businesses are coming than going, which is why we have this positive job growth number,” said Beacon Economics founding partner Chris Thornberg, referring to the 93,000 jobs added in Los Angeles last year, which places it squarely in the middle of the pack of major metropolitan areas.
"There's some really high-profile companies moving into the region," Thornberg said.
Mercedes-Benz and Virgin Galactic both announced major expansions in Long Beach last year, which will bring good, high-paying jobs to the area.
Thornberg said Southern California could be doing more to attract business, but for now at least, most executives feel the positives of being here, such as quality of living and proximity to tech and film companies and key ports, outweigh the negatives, like higher taxes and housing costs.
"We still continue not to build enough new projects, especially high density projects that are necessary for our companies to add payroll," said Thornberg.
Overall, the report, which will be presented Tuesday at Loyola Marymount University, paints an encouraging picture of Southern California's recovery from the recession. (Disclosure: KPCC is a partner at Tuesday's event, but was not involved in drawing up the report.)
"It seems like we've finally gotten the momentum that we've been hoping to see over the last few years," said Thornberg. "You're starting to see what I would call the first signs of us finally starting to throw off the residual of what happened in that horrible 2008-2010 period."
Here are some highlights from the report:
- The outlook for the Los Angeles County economy remains positive, with local employment projected to grow by 1.7 percent through the end of 2015 and unemployment expected to dip to 7.3 percent.
- Home prices will also continue to grow in Los Angeles over the near and long term: from 2016 through 2020, prices are expected to appreciate at an annual rate of 4 percent.
- Housing remains an interesting issue. More survey respondents this year say people can afford homes, but they also predict further increases in the cost of buying a house. Beacon Economics forecasts single-family home prices to rise 2.6 percent through the end of 2015.
- Employment growth in California is forecast to exceed 2.5 percent in 2015, with unemployment falling below 6 percent next year. But residents were split when asked about unemployment: 36 percent expect a decrease, 30 percent see an increase, and 34 percent see no change.
- U.S. domestic demand is picking up steam, a trend that will push the nation’s 2015 economic growth into the 3 percent range, and lead to even better numbers in the years following.