Los Angeles County’s resilient economy could very well be enough to stave off a recession in 2024, though a declining population, the housing crisis and a growing wealth gap continue to present significant long-term challenges, according to a new economic report.
The report, released Thursday by the Southern California Association of Governments (SCAG) as part of its 14th Annual Southern California Economic Summit, said L.A. County continues to face some of the most pressing economic challenges within the region, including labor disruptions in key industries, geopolitical conflict and a struggling office market due to the continued effects of hybrid and remote work. At the same time, the county’s global connectedness and large, diverse economic base have enabled it to continue growing and adding jobs.
“Predictions of a recession by the end of 2023 never manifested, with a real possibility the region avoids a recession in favor of modest sustained growth in the coming years,” said Shannon Sedgwick of the Los Angeles County Economic Development Corp., who prepared the L.A. County analysis for SCAG.
Sedgwick said year-over-year economic growth, as measured in real Gross County Product, will likely level off at 1.2 percent in 2024, down from 2 percent in 2023. Employment is forecasted to grow by 98,000 jobs (1.8 percent) from 2022 to 2023, and 33,800 jobs (0.6 percent) from 2023 to 2024. Inflation in Los Angeles County is expected to increase by 3.7 percent year over year from 2022 to 2023 and expected to slow to 2.4 percent in 2024 in response to the federal government’s continuing monetary and fiscal measures.
“A persistent strength of Los Angeles County’s economy is its global connectedness. However new risks have emerged, including the global economic slowdown, foreign conflicts and recession in China, which all could have outsized implications to economic growth in Los Angeles County and the SCAG region,” Sedgwick said. “As the county navigates its strengths and opportunities for future economic development, addressing disparities, bolstering housing affordability and enhancing economic resilience will continue to be key to its future growth and prosperity.”
Sedgwick is part of an Economic Roundtable convened by the SCAG to provide both a snapshot of the region now as well as a preview of economic opportunities and challenges ahead. Their research was compiled in a report that offered a mostly optimistic forecast for the coming year, though cautioned that inflation and high mortgage rates will likely slow the rate of growth during the second half of 2024.
“Southern California has remained resilient, despite global economic pressures threatening a recession for more than a year,” said Gigi Moreno, SCAG Senior Economist. “Most of our key industries are performing significantly above pre-pandemic levels, and with the resolution of labor disputes at the ports and in Hollywood, we’re going to enter the new year with economic momentum.”
Among the industry sectors that continue to grow across the region, hospitality and tourism, arts and entertainment and healthcare stand out. Advanced manufacturing, software development and scientific and technical consulting also are on a steady growth path.