e-EDGE is now available as an RSS feed. [Click here to subscribe to it.]According to “advance” estimates of the Bureau of Economic Analysis released last week, the U.S. economy bounced up by +5.7% last quarter (seasonally adjusted annual rate or SAAR). This pace was the biggest increase recorded by BEA since the third quarter of 2003. While it’s definitely good news, the level of economic activity is still rather low, -1.8% below the last quarter of 2007 (the recession officially began in December 2007).
Progress was evident in many sectors of the economy during the fourth quarter:
Three sectors made negative contributions to GDP growth last quarter.
To summarize, U.S. economic growth surged during the fourth quarter. The real "push" came from the decisions of many businesses to produce more goods and sell less out of inventory. However, spending by U.S. households, businesses, and exporters all showed some improvement. Even so, a few weak spots remain. In particular, state and local governments face severe budget constraints, while nonresidential construction activity is moribund. Still, if conditions continue on their current path, these shouldn't derail the economic recovery.
Note: The BEA called its release an “advance” report because all of the figures are still preliminary. When preparing its estimates, the BEA did not know for sure what happened to foreign trade, inventories, or construction in December and had to make some assumptions, which may or may not prove correct. Also, the information on consumer spending during December was still incomplete. We’ll get a clearer picture of the fourth quarter economy a month from now, but don’t expect the story to change significantly. (Nancy D. Sidhu)
PR: http://www.bea.gov/newsreleases/national/gdp/2010/pdf/gdp4q09_adv.pdf
The Construction Industry Research Board just reported December and year 2009 building permit valuations for nonresidential construction. In Los Angeles County, industrial permits declined by -70.2% to $40.1 million during 2009. Office permits dropped by -58.1% to $187.1 million, while retail structures fell by -52.6% to $222.4 million. Hotel permits dropped by -95.9% to just $10.6 million, after two active years in 2007 and 2008.
In Orange County, office building permit valuations declined by -95.9% to $4.6 million, while retail was off by -50.6% to $65.1 million, and hotels dropped by -46.1% to $9.9 million. The Research Board reported that no industrial permits were issued in the County during 2009.
In Riverside County, industrial permit values in 2009 fell by -82.6% to $12.3 million, while office permits dropped by -76.9% to $27.3 million. Retail building activity dropped by -82.3% to $56.0 million, while hotel values declined by -83.4% to $6.3 million.
The 2009 numbers from San Bernardino County were equally downbeat, with industrial permit values off by -64.4% to $32.9 million (they take the prize for the largest amount of new industrial activity), and office down by -75.2% to $8.2 million. Retail permits declined by -86.1% to $33.9 million, while hotel permits were down by -67.7% to $24.4 million (also the highest value in the region during 2009).
In San Diego County, industrial permit values dropped by -55.0% to $25.7 million, office was down by -85.1% to $22.6 million, retail declined by -81.1% to $21.2 million, and hotels were off by -90.7% in 2009 to $3.8 million.
LOOK! Ventura County recorded a +1.9% increase in industrial permits in 2009 to $16.6 million. However, office was down by -78.7% to $5.6 million, retail declined by -76.9% to $14.5 million and hotels dropped by -37.2% to $9.4 million.
In the 9-county Bay area, the 2009 nonresidential building permit totals were equally weak. Industrial fell by -53.6% to $137.5 million, while office was down by -82.5% to $117.1 million. Retail permit values dropped by -52.1% to $218.5 million, and hotels were down by -63.3% to $15.6 million.
All in all, 2009 was not a good year for people in construction and real estate. Unfortunately, results for 2010 might not be much better. (Jack Kyser)
The total number of housing permits issued in California during December fell by -21.3% to 46,800 units from 59,500 units a year earlier (seasonally adjusted annual rate or SAAR). Single-family home permits were up by +26.3% to 32,700 units, but multi-family home permits tumbled by -58.0% to 14,100 units. Over the month, permits for single-family homes increased by +17.6% while the number of multi-family permits rose by +25.9%.
In Los Angeles County, 269 permits were issued in December. Total permits issued for 2009 (5,610) fell by -59.1% compared with 2008 (Note: data at the county level are not seasonally adjusted). Permits for single-family homes declined by -40.8% year-to-date with 209 permits issued in December and a total of 2,095 issued for the year. Multi-family permits sank by -65.4% over the year in December to just 60 for the month and 3,515 for all of 2009.
Residential construction in Orange County also ended the year with a whimper. Just 228 permits were issued in December, bringing the total for the past twelve months up to 2,177, representing a decline of -31.1% compared with 2008. Permits for single-family homes rose by +3.1% in 2009(one of the best performances in the state), with 153 permits issued in December and 1,335 for the year. Multi-family permits continued to be a drag - falling by -54.8% to 75 units for the month and to 842 for the year.
The Inland Empire held on to its title as the most active home building region in the state. In December, 593 home were permitted. The total for 2009 was 6,681 compared with 9,101 in 2008 (-26.6%). Single-family housing accounted for 80% of total permits issued in December - 476 units compared with 117 multi-family units. Both sectors declined over the year, however, by -16.9% (4,816 units) and by -43.6% (1,865 units) respectively.
The December permit count in Ventura County was a meager 11 units. During all of 2009, only 341 units were permitted, a decline of -59.5% compared to 2008. San Diego made a fairly strong showing with 285 permits in December (compared to November’s count of 149), but still fell by -42.0% for the year. The total number of permits issued in San Diego County for 2009 was 2,989.
December brought the Bay Area little cause for holiday cheer. Most regions reported sharp declines in residential construction. Only 160 permits were issued in the San Francisco metro area in December (1,072 for the year). This represented a decline of -69.9% compared to the previous year. In the Oakland metro area, a total of 217 permits were issued (2,481 for the year), down by -37.2% for the twelve months ending in December. In the San Jose area, permits jumped up to 300 (266 of which were multi-family) in December (compared to 2008). However, the total number of units permitted in 2009 (1,086) plunged by -70.7%
All of California’s 28 metro areas posted declines in total new units in 2009. The smallest declines were in the Fresno (-7.4%) and Stockton (-6.3%) metro areas. The declines in all other areas were in the double digits. For the year (2009), total new housing units statewide totaled a dismal 36,209 (preliminary), down by -44.3% compared with 2008 and the lowest level on record. Single family units plunged by -24.2% to 25,046. The number of permits issued for multi-family units withered by -65.0% to a mere 11,163 units for the entire year. (Kimberly Ritter)
The California Association of Realtors (CAR) recently released their December 2009 report for existing home sales and prices in California. Statewide, sales of existing single-family homes rose by +1.7% (compared with December 2008) to 558,320 units (seasonally adjusted, annualized rate) while the median price increased by +8.4%. The was the second consecutive year-over-year price increase (in November prices rose by +4.7% for the first time since August 2007) and was the largest year-over price increase in three years. On a month-over basis, December marked the tenth month in a row to see an increase in median price (+0.8%).
In Los Angeles County, unit sales during December rose by +4.3% over the year. The median price increased by +4.9% to $353,560. In Orange County, unit sales jumped by +17.9% during December, while the median price advanced by +12.1% to $496,070. Compared with November the median price in both counties lost ground – retreating in Los Angeles County by -1.7% and by -0.6% in Orange County.
In the Riverside-San Bernardino area, unit sales plummeted by -19.3% compared with December 2008 (and that followed a drop of -13.5% in November). However, December sales jumped by +13.6% over the month after falling by -17.6% in the previous month. The median price also fell in December, declining by -5.1% to $181,130.
Unit sales in San Diego County during December increased by +6.9%, while the median price rose by +10.3% to $382,230. On a month-over basis, sales rose by a robust +22.0% after falling by -17.4% in November. Ventura County saw an improvement in unit sales (+8.2%) in December and a median price that rose by +15.4% to $427,890.
In the San Francisco Bay area, unit sales rose by a strong +28.7% over the year (and by +6.6% for the month). The median price surged by +15.1% to $536,070.
Home sales in December were strong, but the exceptionally large year-over increases seen at the beginning of the year diminished as 2009 drew to a close. December’s sturdy showing was attributable in part to near-historic highs in home affordability and low interest rates (4.93% 30 year fixed).
The CAR reported that the unsold inventory index fell to 3.8 months in December, compared with 5.6 months at this time last year. (Kimberly Ritter)
PR: http://www.car.org/newsstand/newsreleases/dec09salesandprice/
The State Board of Equalization (BoE) recently released fourth quarter 2008 taxable retail sales data, and the numbers were truly awful. From the fourth quarter 2007 to the fourth quarter 2008, sales in the state declined by -16.1%. By sector, the largest declines came in: the automotive group (-33.3%), “other” retail stores (-28.0%), building materials (-23.1%) and service stations (-21.8%). There were a few increases over the year: home furnishings & appliances (+14.9%) and apparel stores (+9.0%). The BoE also reported taxable sales by business & personal service establishment (-12.5% over the year), and “all other” establishments (-1.1%). Total taxable sales (including all three categories) were down by -12.0%.
Around Southern California, the fourth quarter ‘07/’08 retail sales numbers by county went from bad to worse. Riverside County saw a -20.7% decline in taxable retail sales, followed by San Bernardino County with a -19.0% drop. Orange County recorded a -16.3% decline, followed by San Diego County at -15.4%. Retail stores in Los Angeles County saw sales drop by -15.3%, while Ventura County was down by only -14.9%. Obviously, these numbers are not good news for local governments. (Jack Kyser)
PR: http://www.boe.ca.gov/news/tsalescont08.htm
Total passenger traffic reports are in from Los Angeles International Airport (LAX), Ontario International Airport, Long Beach Airport and John Wayne/Orange County Airport. Two of the four local airports (LAX and John Wayne) reported higher levels of passenger traffic compared to a year ago. Meanwhile, two of three (Ontario and John Wayne) experienced lower air cargo tonnage compared to December 2008, the exception being LAX. San Francisco International Airport (SFO) reported an increase in both total passengers and air cargo tonnage in December compared to a year earlier.
LAX total passenger counts (domestic and international) came in at 4.8 million passengers in December. Domestic passengers numbered 3.5 million and international passengers totaled 1.3 million in December. LAX experienced a rise of +3.6 percent in total passenger traffic. For 2009, LAX was down by -5.5 percent. Total air cargo tonnage was up by +25.3 percent from December 2008 to December 2009. However, the 2009 figure was discouraging, as total tons were still down by -7.4 percent.
Ontario International Airport’s passenger traffic figures were weak, down by -5.7 percent in December over the year and plummeting by -21.6 percent in 2009. Meanwhile, air cargo tonnage fell by -5.6 percent from December 2008 and was down by -18.8 percent during 2009.
Long Beach Airport’s total passenger count slightly declined by -1.5 percent in December compared to a year ago. In 2009, Long Beach’s passenger figure dropped by -0.2 percent. The air cargo figures are not available at this time.
The John Wayne/Orange County Airport total passenger count in December (734,285) was up by +6.5 percent relative to December 2008. In 2009, John Wayne Airport passenger traffic was down by -3.2 percent. Air cargo tonnage (1,088 tons) declined by -7.0 percent compared to December 2008. However, the 2009 figure was still down by -13.8 percent.
San Francisco International Airport’s total passenger traffic grew by +3.8 percent in December over the year and was up by +0.1 percent in 2009. Total air cargo tonnage surged by +21.6 percent from December 2008 to December 2009. The 2009 figure was a completely different situation, as air cargo tonnage sank by -17.1 percent. (Ferdinando Guerra)
PR: http://www.lawa.org/welcomelax.aspx
http://www.lawa.org/welcomeONT.aspx
http://www.ocair.com/,http://www.longbeach.gov/airport/default.asp
http://www.flysfo.com/web/page/index.jsp
IMF: The International Monetary Fund (IMF) released an update to its World Economic Outlook (WEO) last week. The IMF raised its forecasts for the world economy in 2010, as it now expects the global recovery to be stronger than first anticipated. They are now projecting the world economy to grow by +3.9% in 2010 versus the original October 2009 forecast of +3.1%. The Fund expects the advanced economies to grow at a much slower pace than the emerging economies. Our February annual forecast publication will provide further detail related to the individual country forecasts for 2010. (Ferdinando Guerra)
Wednesday, February 17, 2010: LAEDC 2010-2011 Economic Forecast
7:00 a.m. Breakfast and Networking. 8:00 a.m. -10:30 a.m. Program. At the Los Angeles Marriott Downtown.
The 2010-2011 LAEDC Economic Forecast and Industry Outlook will present an in-depth look at the industries that are affecting us including the housing market, regional economy and national economic outlook. Join us for an informative session by Republican gubernatorial candidate and California Insurance Commissioner Steve Poizner, California Association of Realtors Deputy Chief Economist Dr. Robert Kleinhenz, and LAEDC economists Jack Kyser and Dr. Nancy D. Sidhu.
March 3-5, 2010: CALED and IEDC: Economic Development Credit Analysis
The Westin Bonaventure (404 South Figueroa Street), Los Angeles. Early bird registration (by Jan 20th): $525. Non-IEDC Member Rate: $625.
This hands-on course presents an overview of business financing tools and available private financing options, as well as how the public sector can complement bank financing. Learn how to read financial reports, financial statements, balance sheets and profit and loss statements. Course participants will perform credit analysis by determining how well a company buys and sells to make a profit. Also, they will learn how to determine if the company pays its suppliers on time, collects its receivables, and controls costs to make a profit. Enroll now to understand the basics of structuring deals for small businesses that often combine public and private sector financing programs.
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