e-EDGE is now available as an RSS feed. [Click here to subscribe to it.]Happy New Year!!! At LAEDC, that phrase means it’s time to update our economic forecast. We will release the final results on February 17th. In the meantime, here are some “big picture” thoughts about the economy today and going forward.
The economy today is just past the bottom of a severe downturn, which began way back in December 2007. The 2008-2009 recession was characterized by declining employment and rising joblessness; falling home sales and construction activity; reduced retail sales, especially automotive and furniture; lower business investment; and slowing exports and imports. Government spending, however, continued to increase.
Many industries are still feeling downward pressures, but not all. Indeed, some intriguing developments took place in the latter part of 2009.
If they continue, these new trends will support an economic recovery in 2010 despite rising bankruptcies, a severe downturn in commercial real estate, and weakness in spending by state and local governments.
However, the economy is not yet home scot-free. Several interrelated issues need to be resolved before a really healthy recovery can get under way. Prominent among them are the following:
We are pretty sure that 2010 will be a year of recovery, but it’s too soon to discern how strong the recovery will be. We’ll provide our latest reading at the February 17th forecast event. Remember to sign up! (Nancy D. Sidhu)
The California Association of Realtors (CAR) recently released their November 2009 report for existing home sales and prices in California. Statewide, sales of existing single-family homes rose by +4.7% (compared with November 2008) to 536,720 units (seasonally adjusted, annualized rate) while the median price increased by +5.8%. This was the first year-over-year increase since August 2007. On a month-over basis, November marked the ninth consecutive increase in median prices (+2.4%).
In Los Angeles County, unit sales during November rose by +7.2% over the year. The median price ticked up by +0.1% to $359,670. In Orange County, unit sales jumped by +28.0% during November, while the median price increased by +10.1% to $499,020 (keep in mind we are comparing prices to November 2008 when the economy was falling off a cliff). Compared with October, the median price in Los Angeles advanced by +3.9% while the median price in Orange County moved up by +1.8%.
In the Riverside-San Bernardino area, unit sales continued their downward skid, tumbling by -13.5% compared to November 2008 and by -17.6% over the month. The median price also fell, declining by -12.3% to $177,840.
Unit sales in San Diego County during November increased by +7.5%, while the median price rose by +9.0% to $376,450. On a month-over basis, sales plunged by -17.4%. Ventura County saw unit sales slip by -1.1% in October over the year, while the median price increased sharply (+13.9%) to $435,800.
In the San Francisco Bay area, unit sales rose by a robust +26.0% over the year (but were down by -12.7% for the month), and the median price surged by +19.8% to $567,250.
In spite of the increase in November’s median home price, affordability in California remains near historic highs. Since reaching its lowest point in this cycle (February 2009), the statewide median home price has increased by nearly $60,000, due in part to lower rates of foreclosure reducing the number of lower-priced homes for sale.
Responding to improved home affordability, low interest rates and expansion of the federal tax credit program, first-time homebuyers and existing homeowners wanting to trade up helped to increase the pace of sales in November. The median number of days it took to sell a single-family home in November was 33.1 days compared with 44.4 days for the same period a year ago.
The CAR reported that the unsold inventory index fell to 4.5 months in November, compared with 7.1 months at this time last year. (Kimberly Ritter)
PR: http://www.car.org/newsstand/newsreleases/novsalesandprice/
The total number of housing permits issued in California during November fell by -46.3% to just 38,100 units from 71,000 units a year earlier (seasonally adjusted annual rate or SAAR). Single-family home permits were up by +9.4% to 26,700 units but multi-family home permits tumbled by -75.5% to 11,400 units. [The number of multi-family permits issued in November 2008 - 46,600 units - was unusually high.] Over the month, permits for single-family homes increased by +8.5% while the number of multi-family permits rose by +26.7%.
In Los Angeles County, a total of 355 permits were issued in November. Total permits issued during the first eleven months of this year (5,343) fell by -58.5% compared with the same period in 2009 (Note: data at the county level are not seasonally adjusted). Permits for single-family homes declined by -43.0% year-to-date, with 122 permits issued in November. Multi-family permits dropped by -63.9% to 233 units.
Residential construction in Orange County looked somewhat less bleak in November. A total of 153 permits were issued, resulting in a year-to-date decline of -36.7%. Permits for single-family homes declined by -3.5% (one of the best performances in the state), with 97 permits issued in November. Multi-family permits declined by -58.7% to 56 units.
With 690 units permitted in November, the Inland Empire continued as the most active home building region in the state. Still, the number of permits issued was down by -27.4% compared with the same period last year. In the Riverside-San Bernardino area, single-family housing usually dominates, but in November, the balance was closer to even. Single-family permits totaled 375 units (down by -20.9%), compared to 315 permits for multi-family homes (-39.7%). However, year-to-date, 5,504 single-family permits were issued in contrast to 2,900 for multi-family residences. The November permit count in Ventura County was a meager five units, a decline of -59.9% since November 2008. San Diego posted 149 permits in November, a drop of -46.1%.
November was no kinder to residential construction in the Bay Area with most regions reporting sharp declines. Only 82 permits were issued in the San Francisco metro area November. This represented a decline of -71.7% compared with the same period last year. In the Oakland metro area, a total of 214 permits were issued, down by -40.7% from November 2008. In the San Jose area 86 permits were issued, a decline of -72.1%.
All of California’s 28 metro areas posted double-digit declines in total new units in the first eleven months of 2009. Single-family permits increased in only two metro areas: Bakersfield (up by +1.1%) and Vallejo-Fairfield (up by +58.7%). Multi-family permits were up in three metro areas. Among the state’s 58 counties, only five reported gains in total permits issued for new housing and even those were small increases in relatively small counties. (Kimberly Ritter)
The November report from the Construction Industry Research Board (CIRB) continued to point to a troubled industry. In Los Angeles County, there was no new activity during the month in either the office or hotel sectors. Through 11 months of 2009, permit values lagged last year by -59.9% and -95.9% respectively. A modest number of industrial permits were issued during the month but through November this sectors permit valuations trailed last year by -69.8%. About $46 million in new retail permits were issued during the month, but the sector’s 11-month valuation total still lagged the comparable 2008 period by -59.9%.
In Orange County, no new permits for office and hotels were issued during November. The 11-month valuations were behind last year by -95.9% and -46.3% respectively. Over $26 million in new retail permits were issued during the month, but year-to-date this sector still lagged last year’s total by -45.6%. And no industrial permits were issued in the County through November according to the CIRB.
In Riverside County, new commercial construction remained flat, with no permits issued for any of the four sectors we track. At the 11-month mark, the declines from the comparable period last year were as follows: industrial (-76.4%), office (-92.1%, retail (-86.3%), and hotels (-79.8%). It was the same story in San Bernardino County during November. The 11-month totals all trailed 2008: industrial (-64.4%, office (-75.2%), retail (-85.8%) and hotels (-67.7%).
Things were a little livelier in San Diego County during November. Modest numbers of new projects were permitted during the month, but industrial permit values through 11 months were behind last year by -55.0%, office was down by 85.3% and retail was down by -77.9%. There were no hotels permitted in November, and the sector trailed last year by -90.7%.
The only signs of commercial construction life in Ventura County during November were in office. Still, year-to-date permit values trailed last year’s total by -78.7%. No permits issued during November for industrial, retail and hotel projects. The 11-month total for retail was behind last year by -76.6%. However, industrial and hotel valuations were still ahead of last year, by +1.9% and +29.1% respectively.
The Bay Area’s commercial construction market also continued to struggle through November. The major building types were all behind the 11-month 2008 permit value totals: industrial (-54.9%), office (-83.8%), retail (-50.0%, and hotels (-63.3%). (Jack Kyser)
Total passenger traffic reports are in from Los Angeles International Airport (LAX), Ontario International Airport and John Wayne/Orange County Airport. Two of the three local airports (LAX and John Wayne) reported higher levels of passenger traffic compared to a year ago, while two of three (Ontario and John Wayne) experienced lower air cargo tonnage compared to November 2008, the exception being LAX.
LAX total passenger counts (domestic and international) came in at 4.4 million passengers in November. Domestic passengers numbered 3.2 million and international passengers totaled 1.2 million in November. LAX experienced a rise of +3.4 percent in total passenger traffic. Year-to-date, LAX was down by -6.3 percent. Total air cargo tonnage was also up by +22.4 percent from November 2008 to November 2009. However, the year-to-date figure was discouraging, as total tons were still down by -10.0 percent.
The John Wayne/Orange County Airport total passenger count in November (700,223) was up by +7.8 percent relative to November 2008. Year-to-date, John Wayne Airport was down by -4.0 percent. Air cargo tonnage (1,240 tons) declined by -7.0 percent compared to November 2008. However, the year-to-date number was down by -14.2 percent.
Ontario International Airport’s passenger traffic figures were weak, down by -7.7 percent in November over the year and tumbling by -23.4 percent year-to-date. Over the same period, air cargo tonnage plummeted by -18.3 percent from November 2008 and was down by -19.9 percent year-to-date. (Ferdinando Guerra)
PR: http://www.lawa.org/welcomelax.aspx
http://www.lawa.org/welcomeONT.aspx
http://www.ocair.com/
The U.S. Census Bureau recently released third quarter state tax collections by state and type of tax. Total tax revenues collected across all fifty-one states (including Washington DC) declined by -10.9% to $163.1 billion in the third quarter of 2009 compared with $183.0 billion collected during the same period last year. The state of California collected $24.0 billion in taxes during the third quarter or -9.2% less than the third quarter 2008 ($26.5 billion).
The results for the “big three” tax categories were downright dismal. In California, general sales tax revenues declined by -5.8% to $7.7 billion. A year ago, the state collected $8.2 billion in general sales taxes. Across the nation, the slump in general sales tax revenues was even worse. Nationwide, revenues fell by -9.2% to $54.7 billion in the third quarter from $60.2 billion last year.
Personal income taxes suffered an even larger decline. California personal income tax revenues were down by -16.1% during the third quarter. Californians paid $9.7 billion in state personal income taxes compared to $11.6 billion in the same period last year. Nationwide, $54.9 billion of personal income tax revenue flowed into state coffers during the third quarter, a decline of -11.6% compared with the third quarter of 2008. Altogether, sales and income taxes make up about half of state (and local) revenue.
Corporate taxes, which posted gains during the second quarter of 2009, stumbled in the third quarter. Across the U.S. corporate income taxes plunged by -23.3% (after rising by +2.9% 2q09) to $7.9 billion from $10.3 billion. The decline in California was more moderate, relatively speaking. During the third quarter, corporate taxes dropped by -13.3% to $1.9 billion from $2.2 billion last year. The surge in second quarter corporate tax collections (+71.9%) was due to an increase in payments made during June and July to avoid a new penalty imposed for understating estimated taxes. The third quarter numbers, while down significantly, are more in line with historic levels.
The declines in general sales tax and personal income tax collections reflected the recession’s devastating impact on employment and consumer spending. The third quarter was the fourth consecutive quarter in which tax collections were below year-ago levels. Weakness in state tax collections is expected to continue well into 2010. State tax revenues tend to lag behind the vicissitudes of the economy, as it takes time for collections to catch up with up and down swings in retail sales and personal income. (Kimberly Ritter)
PR: http://www.census.gov/govs/www/qtax.html
Save the Date!
Tuesday, January 14, 2010: 2010 Economic Recovery Forum: Access to Capital and Creating Jobs
7:15 - 10:00 a.m. at Woodbury University, Fletcher Jones Foundation Auditorium (7500 N. Glenoaks Blvd.), Burbank. Admission: $25.
REGISTER TODAY!
Wednesday, February 17, 2010: LAEDC 2010-2011 Economic Forecast and Industry Outlook
7:00 a.m. Breakfast and Networking. 8:00 a.m. -10:30 a.m. Program. At the Los Angeles Marriott Downtown.
The LAEDC Economic Forecast and Industry Outlook is Southern California’s premier source for in-depth economic information and analysis on Los Angeles County and the surrounding areas. This event is attended by more than 600 of the region’s top business, education, civic, and government leaders. The LAEDC’s economic research reports are broadly used by the media, government, and private industry organizations, and have been ranked #1 by the Wall Street Journal. More information TBA.
The Economic Data Global Express (e-EDGE) is a free service of the Los Angeles County Economic Development Corporation (LAEDC). Permission to quote any proprietary part of this release is granted given proper credit. Distribution is allowed provided that no modifications are made to the original content. Sponsors of this service do not necessarily endorse all opinions stated herein. For more information, please e-mail to eedge@laedc.org. To contact LAEDC, please call 213-622-4300.
Subscribe to e-EDGE and receive current economic news and major developments. Your e-mail address will not be disclosed to any outside party (including e-EDGE sponsors) under any circumstances.
To send us comments regarding e-EDGE, please e-mail to eedge@laedc.org.