Weekly Report – March 16, 2015
Significant Economic Reports
The City National Economy & Jobs Report for the First Quarter of 2015
In 2014 the U.S. economy grew by 2.4%, a slight acceleration over the 2.0% growth in 2013. California’s economy grew by 2.9% in 2014, also an improvement over the 2012 to 2013 growth. Looking ahead to 2015, we expect both the CA and national economies to grow at a faster clip than in 2014. The employment gains over the last year will help fuel economic growth in 2015 as consumer spending makes up a large portion of economic growth in the state. Wage growth also improved in 2014, which will further bolster spending in the coming year. The average weekly wage last year increased by 1.6% over the prior year, up from the 1.2% growth from 2012 to 2013.
There is a strong demand for professional and business services in the state, which has helped to fuel both output and employment growth for this industry. During the fourth quarter the number of professional and business services jobs increased at a 5.8% annualized rate, up from 4.4% the prior quarter. This industry’s strong growth in CA is one of the reasons gross state output is growing faster than the nation, since U.S. professional and business services employment in the fourth quarter grew by 3.9% in comparison. Housing is expected to be a source of economic growth for the state in 2015. It is no secret that the state is undersupplied, and Californians spend more on housing than the rest of the nation. According to our analysis, Californians spent on average $26,000 on housing and utilities compared to $16,500 per household for the U.S. As a result, we believe positive trends in employment, consumer spending, and housing will mean a strong 2015 for the Golden State. Full report: http://goo.gl/mpnRFt
The 2014 Otis Report on the Creative Economy
The 2014 Otis Report on the Creative Economy of the L.A. Region found that a total of 355,600 wage and salary workers in L.A. County were employed directly in the creative industries in 2013. By sector, the largest employment counts were in entertainment (132,700 jobs), fashion (89,900 jobs), and publishing and printing (30,700 jobs). Although the entertainment industry employed the greatest number of workers by far – about 37% of total employment, the creative economy of L.A. is diverse with jobs distributed among a variety of industry sectors. The creative economy’s 355,600 wage and salary workers were equivalent to nine percent of all 4.1 million wage and salary workers in L.A. County during 2013.
Direct, indirect, and induced employment in the creative industries of Los Angeles County totaled approximately 612,400 jobs in 2013, which is 1 in 7 jobs. The ripple effect is substantial, giving rise to job gains and increases in incomes in a wide range of industries across the local economy. In Orange County, the creative industries employed 51,300 direct workers in 2013. In contrast to L.A. County, the largest employment sector was publishing and printing with 12,400 jobs, followed by fashion with 11,000 jobs. Direct, indirect and induced employment in the creative industries located in Orange County totaled an estimated 82,700 jobs. Full report: http://goo.gl/ndLJze
Invest in and Maintain a World Class Transportation System
L.A. Metro: The board of directors voted to have Phil Washington, former general manager of Denver’s Regional Transportation District, to succeed Art Leahy as Metro’s CEO. Art will take over as the new CEO of Metrolink. Washington was confirmed in a unanimous vote, after being courted by Mayor Eric Garcetti’s administration for the past year. Top priority? In 2012, Measure J, a 30-year extension of Measure R, came up half a point short of the two-thirds majority needed for a tax increase and the board of directors is considering whether or not to go back to voters with another tax increase in 2016. Getting Measure R2 on the ballot and passed by voters should be Washington’s top priority; without money, nothing gets fully built. Some good news: the extension of the Expo Line to downtown Santa Monica is forecast to open in the first half of 2016 while the Purple Line Extension to Wilshire/La Cienega is slated for 2023 with the second section to Century City looking at a mid-2020s opening. Meanwhile, the subway extension to Westwood still has a 2036 opening and the Sepulveda Pass Transit Corridor project is slated for 2039 and in need of additional funds if the project ends up being an underground rail line. All three of those projects are getting funding from the Measure R half-cent sales tax approved by Los Angeles County voters in 2008. The Purple Line Extension is also receiving a big injection of federal funds the reason the federal funding mentioned above is very important and the Sepulveda Pass project will need more dollars from somewhere to become a rail line.
Strengthen Government’s Role to Foster Economic and Jobs Growth
CA Environmental Quality Act (CEQA) Reform: A California Supreme Court decision upheld the city of Berkeley’s ability to carve out exemptions for California Environmental Quality Act (CEQA). A hillside home proposal by Lotus software company founder Mitch Kapor was challenged by environmental groups and community activists, citing that it must be subject to CEQA review – a process usually reserved for larger projects. The court decision upholds local municipalities to exercise discretion in determining whether or not “unusual circumstances” exist on a would-be CEQA-exempt project such as a single-family home. The decision strengthens the ability of local municipalities to make a determination of of CEQA exemption based on whether or not “unusual circumstances” apply. However, project opponents who provide convincing evidence may establish the “unusual circumstances” basis, which would result in additional procedural delays for projects.
Enhance L.A.’s Brand as a Top Tourism & Convention Destination
L.A. Convention Center: Bud Ovrum the executive director of the Convention Center and Ernie Wooden, the CEO of L.A. Tourism and Convention Board are pushing plans to expand the 870,000-square-foot convention center to 1.3 million square feet, including 60,000 square feet of ballroom space to attract bigger, more profitable gatherings. Three architectural firms have been asked to submit design proposals for that project— some with a new 1,000-room hotel next to the convention center, some without. Officials expect to select a firm to create the final designs in June. Los Angeles has fewer than 5,000 hotel rooms within a mile of the convention center, with an additional 2,000 or so rooms under construction. Meanwhile, Anaheim has more than 13,000 hotel rooms within a mile of its convention center, and San Diego has about 11,000 rooms within walking distance. Los Angeles grabbed the No. 19 spot in a ranking of the nation’s most popular destinations for conventions and business gatherings released last year, below cities such as Houston, Boston and even Scottsdale, Ariz.
Prepare a Skilled & Quality Workforce for the Region
Federal Immigration Reform: Washington Attorney Bob Ferguson’s op-ed in the Washington Post on March 12 explained why he is leading a coalition of 14 states that support President Obama’s plan to make millions of immigrants eligible to live and work legally in the United States. Ferguson cites figures that immigrants’ wages would increase by as much as 240 percent, and that the State California would see an additional $907 million in tax revenue. Ferguson also highlights the fact that legalized workers are more likely to receive employer-sponsored health insurance, leading to greater percentages of health coverages and lessening strains on local emergency rooms. Op-Ed: http://goo.gl/TZtPuD
City of L.A.’s Business Tax: The Los Angeles City Council will begin deliberations on Mayor Garcetti’s proposal to raise the minimum wage to $13.25 by 2017. The L.A. City Council’s Economic Development Committee will hold a set of public hearings throughout the City to consider the increase.