SCAG economists bullish on region’s outlook

Los Angeles – The forecast for the Southern California economy is strong as the region continues to show enough resilience to avert a recession, according to leading economists in the region.
According to the latest quarterly update from the Southern California Association of Governments (SCAG) Economic Roundtable, the region’s labor market and many of its foundational industry sectors remain healthy, even against the headwinds of a softened global economy and other pressures closer to home.
Unemployment remains near historic lows (5.1%, seasonally adjusted), international travel into the region is up considerably from year-ago levels and the logistics sector, though down from its pandemic-era peak, remains a fundamental strength, particularly in the Inland Empire.
“The consensus is that the Southern California economy continues to exhibit resilience, with the region averting a recession in 2023,” the Roundtable reported from its September meeting.
Even so, the economists did raise some cautionary flags:

• Although the West Coast ports’ labor agreement with dock workers has been ratified and the writer’s strike has been resolved, continued labor dispute in the hospitality industry poses risks to the regional economy. In addition, ripple effects from the film industry strikes will be felt for a while. Among the notable impacts: Workers not covered by the Writers Guild of America or Screen Actors Guild have withdrawn $44 million from retirement accounts. Also, uncertainty within the industry has put financing for projects in the pipeline at risk.
• Recovery within the region’s tourism sector continues to lag. Employment is 11% below the pre-pandemic high across the SCAG region. However, a positive signis the recent increase in international passenger volumes, with Los Angeles World Airports reporting a 42% year-over-year increase in July. Other airports in the region also have observed a surge in passenger traffic.
• Inbound container traffic struggles to return even with the labor dispute resolved. September is usually a critical month for holiday imports, so the forthcoming September container traffic data will be a critical indicator.
• The region’s logistics sector enjoyed rapid growth during the pandemic as consumer share of spending on goods surged. In 2023, however, employment has leveled off as consumption, tempered by inflation, shifted from durable goods to services.
• The economic outlook for the European Union is more pessimistic than it is in the United States. In China, the forecast is increasingly grim and compounded by severe leadership uncertainty. While this is not expected to impact the U.S. economy meaningfully, it may impact California and the SCAG region due to regional dependence on trade.

The SCAG Economic Roundtable is a consortium of regional economic experts that meet every quarter to update the region’s economic outlook and discuss challenges and opportunities facing the six counties that comprise SCAG.Members of the Roundtable are selected for three-year terms and have expertise in the economics of SCAG’s six counties, workforce development, equity and sustainability. Members are:

• Imperial County, Michael Bracken, Development Management Group, Inc. (DMG)
• Los Angeles County, Shannon Sedgwick, Los Angeles County Economic Development Corporation (LAEDC)
• Orange County, Wallace Walrod, Tech Coast Consulting Group (TCCG) and Orange County Business Council (OCBC)
• Riverside & San Bernardino Counties, Manfred Keil, Inland Empire Economic Partnership (IEEP) and Claremont McKenna College
• Ventura County and the SCAG Region, Mark Schniepp, California Economic Forecast (CEF)
• Equity, Karthick Ramakrishnan, University of California, Riverside (UCR) and California 100
• Sustainability, David Roland-Holst, Berkeley Economic Advising & Research (BEAR) and University of California, Berkeley
• Workforce Development, Shaun Fernando, Guidehouse Consulting