How Is the L.A. Area Economy Doing?

How is the LA economy doing?  My term as the Chairman of the Los Angeles County Economic Development Corporation (the “LAEDC”) just came to an end, and so I thought it might make sense sum up what our LAEDC economists (and I) see happening in LA’s economy right now. 

The news is that our diverse local economy, which is driven by about 15 different industry clusters, is starting to improve at last.  Some of the industries leading the way are entertainment, international trade and tourism, which appear to be improving.

There are some big challenges too:  among them,

• Japan – Japan is the LA Customs District’s no. 2 trading partner; as a result of the recent earthquake, Japanese companies won’t be able to export as much in the next quarter.  The LA Customs District handles 22% of the total US trade with Japan, and Japanese trade is 11% of the trade through our area, so we’ll likely feel a negative impact.  Also more than 300,000 Japanese tourists stayed overnight in LA County last year – this number is also likely to drop.
• Gas/oil prices – Rising gas prices will hurt retail spending because folks in Southern California need to drive.  If they’re spending their money on gas, they can’t shop as much.  Businesses with fleets or lots of shipping costs are likely to be affected.  Also, rising gas prices has made the LAEDC raise its projected inflation from 2