Beacon: Economy Goes Out With a Bang

LOS ANGELES—According to the end-of-the-year Beacon Economics report, 2014 saw great economic expansion, despite a slow start. The report predicts that this economic expansion will slow somewhat in 2015, but adds that the economy will still perform moderately better than it did this year.

Job growth was the catalyst of the economic expansion. Throughout the year, 250,000 new jobs were created each month nationally, with California alone getting 319,000 new non-farm jobs from the 12-month period between October 2013 and October 2014. The Beacon Economics forecasters explained that nearly every job sector experienced employment growth this year.

Nationally, this job growth is expected to lead to increased incomes in 2015, which will likely lead to an increase in consumer spending. Throughout the year, the forecast predicts that the stock market will continue to climb with no inflation in sight, despite the growth of bank lending. Although bank lending is picking up, it is not increasing quick enough to spur inflation. Finally, the forecast expects the housing market to pick up in 2015. This growth is driven by increased demand and the fact that mortgage credit is easier to obtain with FICO score a Fannie Mae prime mortgage falling to below 740.

The California economy alone has experience similar growth in stride with the national economy. While the state economy saw significant job growth throughout the year, the forecast expects jobs to continue to grow through 2019 and an increase of 2.5% over the next year. By the end of the year, the unemployment rate will dip below 6%. Like the national economy, the California housing market is also expected to pick up with increased demand for homes. Home prices will grow by a rate of 3% to 5% over the next year, but will remain positive.

The UCLA Anderson end-of-year economic forecast also found that the California, and the Los Angeles economy, was in need of housing, specifically multifamily housing due to the growing densities in the city. For that reason, multifamily development in California will also be essential.