LOS ANGELES—Job growth in Los Angeles is slowing, but there is no need to worry that a recession is around the corner. According to a Los Angeles outlook report from Beacon Economics, job growth in Los Angeles has been cut in half compared to the same time last year, but this is likely because the market has reached full employment and the market is hitting, what Beacon Economics' Robert Kleinhenz calls, cruising speed or more stable consistent performance.
“This is not a precursor to a recession by any means. What I like to say is that the economy is hitting cruise speed,” Kleinhenz, economist and executive director of research at Beacon Economics, tells GlobeSt.com. “When you get on a freeway, you have to accelerate to get up to the cruise speed and then you settle in. When we are at full employment, we are getting up to the point where we are operating at cruise speed for the economy. There are no warning signs, and we are slowing down but that is because we are reaching capacity.”
Kleinhenz is not surprised that we are hitting a slowdown in employment growth with consistent job gains for the last several years and an unemployment rate lower than the state and the nation. Once unemployment drops that low, it is typical to see a reduction in growth speed. “When you get further into the late stages economic cycle, you have more hires that are full time hires,” explains Kleinhenz. “When that happens to an increasing degree, the pace of job growth is going to slow. We expect that to happen.”
Another factor that shows the slowing job growth is not a sign of a recession is the fact that growth has slowed across industries, not in a particular industry or sector. “We have seen a slowdown in job growth across all industries. For example, we have been paying a lot of attention to tech in California because it was a big driver of growth, and that sector has slowed down along with so many other sectors in the economy,” explains Kleinhenz. “When that happens, you have to conclude that it is a bigger issue in the economy, and it is the fact that we are hitting up against full employment.”
LOS ANGELES—Job growth in Los Angeles is slowing, but there is no need to worry that a recession is around the corner. According to a Los Angeles outlook report from Beacon Economics, job growth in Los Angeles has been cut in half compared to the same time last year, but this is likely because the market has reached full employment and the market is hitting, what Beacon Economics' Robert Kleinhenz calls, cruising speed or more stable consistent performance.
“This is not a precursor to a recession by any means. What I like to say is that the economy is hitting cruise speed,” Kleinhenz, economist and executive director of research at Beacon Economics, tells GlobeSt.com. “When you get on a freeway, you have to accelerate to get up to the cruise speed and then you settle in. When we are at full employment, we are getting up to the point where we are operating at cruise speed for the economy. There are no warning signs, and we are slowing down but that is because we are reaching capacity.”
Kleinhenz is not surprised that we are hitting a slowdown in employment growth with consistent job gains for the last several years and an unemployment rate lower than the state and the nation. Once unemployment drops that low, it is typical to see a reduction in growth speed. “When you get further into the late stages economic cycle, you have more hires that are full time hires,” explains Kleinhenz. “When that happens to an increasing degree, the pace of job growth is going to slow. We expect that to happen.”
Another factor that shows the slowing job growth is not a sign of a recession is the fact that growth has slowed across industries, not in a particular industry or sector. “We have seen a slowdown in job growth across all industries. For example, we have been paying a lot of attention to tech in California because it was a big driver of growth, and that sector has slowed down along with so many other sectors in the economy,” explains Kleinhenz. “When that happens, you have to conclude that it is a bigger issue in the economy, and it is the fact that we are hitting up against full employment.”
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