UCLA forecast sees steady job growth in California, L.A. film industry dominates

The United States “looks like an island of stability in a very volatile world,” while California should continue to pick up jobs through 2017, according to a quarterly economic forecast from the UCLA Anderson School of Management.

UCLA Anderson Forecast also looked at the region’s entertainment industry and said Los Angeles continues to dominate entertainment production in the United States

UCLA Anderson Forecast Senior Economist David Shulman writes in the report that the U.S. is still on track for 3 percent GDP growth for the next two years, despite slow growth and currency devaluations throughout much of the rest of the developed world. Payroll employment is expected to increase at a 250,000-per-month pace, and the national unemployment rate will hit 5 percent by year’s end.

“With Europe and Japan mired in near-zero growth,” Shulman says, “the U.S. looks like an exception.”

Meantime, California is expected to experience slightly weaker first and second quarters, compared with the December report, which will be offset by stronger third and fourth quarters.

“The increase in U.S. growth rates from construction, automobiles, and business investment, as well as higher consumer demand, will continue to fuel our local economy,” says Senior Economist Jerry Nickelsburg, author of the California forecast.

Nickelsburg expects a steady decrease in the state’s unemployment rate over the next three years, with the state’s unemployment rate to be “insignificantly different” from the U.S. rate at 5.1 percent by the end 2017.

The estimate for the 2015 total employment growth is 2.4 percent, and 2.2 percent for 2016 and 1.5 percent for 2017. Payrolls will grow at about the same rate during the next three years. Real personal income growth is estimated to be 4.2 percent in 2015 and forecast to be 4.6 percent and 3.7 percent in 2016 and 2017, respectively. The creation of new jobs in California is widespread across sectors, the report says.

“California’s employment, even after adjusting for the impact of the slowdown/shutdown at the ports, should continue to grow faster than the U.S., though not by much, and the unemployment rate should continue to fall through the forecast period,” says Nickelsburg.

The unemployment rate will hover around 6.5 percent through the balance of 2015. Unemployment will fall through 2016 and will average 5.5 percent, a slight decrease from Anderson‘s last forecast. In 2017 an unemployment rate of approximately 5.1 percent is forecast, essentially the same as in the nation.

For housing, the California report says recent data suggest a possible lowering of demand that might portend a downturn in the market. However, the number of increasing requests for permits for new construction by builders suggests otherwise. Nickelsburg says the slowdown in home sales might reflect home buyers’ and sellers’ interacting to determine where the market is going, and that the increase in home building and construction hiring will slow, but not turn negative.

As for the entertainment industry in Los Angeles, economist William Yu found that from 2001 to 2013, the industry’s total employee compensation grew by 22 percent. The nationwide compensation for the entertainment industry grew 33 percent and its total output by 80 percent. The modest growth of Hollywood during this period is higher than the Los Angeles economy overall, but lower than other industries in other major metros, such as Silicon Valley’s high-tech sector.

Los Angeles had an estimated economic output at $55 billion in 2013. Its employee compensation totaled $14.3 billion in 2013, much higher than New York’s $6.5 billion or San Francisco’s $1 billion. Los Angeles also has the highest percentage of the creative workforce in arts, design, entertainment, sports and media occupations.

Entertainment exports in terms of royalties continue to grow, but at a slower speed than other U.S. exports services. Yu says that to boost exports, reducing some barriers in Asian markets is key.

Finally, each additional production day in film and TV shows in the city is estimated to increase at least one job in the entertainment industry in Los Angeles. Yu adds that private investment and production in the entertainment industry in Los Angeles will not only keep the city at the head of this promising and creative industry, but it will also help advance the city’s economy as a whole.

Shulman, Nickelsburg and Yu will present their reports at UCLA Anderson Forecast’s quarterly conference March 12. The conference will include a number of panel discussions that focus on the entertainment industry, and will feature a conversation between Peter Guber, CEO of Mandalay Entertainment, and UCLA AndersonProfessor Sanjay Sood.


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