Experts from Cal State Dominguez Hills said Thursday, October 28, a year of strong economic growth in the South Bay, which is likely to continue into 2022 as cities emerge from the coronavirus pandemic and emerging industries strive to shape the region’s future.
This assessment was provided by the South Bay University Institute of Economics, which presented a report with an assessment of the state of the region’s economy and a forecast for the year ahead. The Institute, which is part of the Cal State Dominguez Hills, presented this report during its seventh annual South Bay Economic Forecast & Industry Outlook on a campus near Carson.
With high vaccination rates and low coronavirus rates, declining unemployment and record high house prices, there is plenty of room for optimism, the report said.
“Southern California is doing well,” said co-director Finnwin Prager. “And we believe there are good prospects on the horizon in the South Bay.”
The report says that labor shortages have been a problem, especially in the wake of the pandemic, but the labor market appears to have largely recovered. Many businesses across the country began quickly rehiring employees after several government-mandated shutdowns were relaxed. As a result, the unemployment rate quickly returned to mid-2010s levels.
California has an unemployment rate of 7.6%. The unemployment rate in South Bay is 3.4%.
Manufacturing, retail, hotels and catering, and health and social care were the main employers in the South Bay before the pandemic, accounting for nearly half of all jobs. But after last year’s homebody orders, employment across all major South Bay industries has plummeted.
The report says that employment in the South Bay has declined by more than 12% since the second quarter of 2019 and the same period last year.
Of course, employment in the South Bay is still lower than it was before the pandemic, according to the report. But the number of businesses has continued to grow after the initial downturn caused by the pandemic. And, in some cases, large industries, including art; entertainment and recreation; educational services; professional, scientific and technological services; real estate; and in the area of rental and leasing – in recent months there has been an acceleration in the growth of new businesses.
This acceleration, combined with the decline in unemployment and innovation fueled by the pandemic, is part of the “creative destruction process,” a process based on innovation that replaces old production methods with new ones, the report says.
Industries in the South Bay are more resilient than they were before the pandemic, according to Prager, thanks to a process of creative destruction that includes shifts as companies adapt to let their employees work from home rather than in the office.
According to another co-director of the institute, Jose Martinez, it will take until June 2023 to reach pre-pandemic employment levels. The institute did not provide current employment data for South Bay. But Martinez said the region was “growing twice as fast as” during the Great Recession.
Meanwhile, South Bay home prices have also followed an equally rapid recovery during the pandemic, ahead of the Great Recession, Martinez said. In particular, in the coastal cities of the region, housing prices have risen, and since June 2020, their prices have increased. The current price range for coastal homes, the report says, is between $ 2.6 million and $ 3.2 million, representing an increase of 32%. from June 2020.
“Ironically, the property has been declared immaterial,” Martinez said, referring to the outage due to the pandemic. “House prices are always high with historically low interest rates.”
As each industry has suffered and recovered from the pandemic in different ways, the trajectories of how each industry will contribute to the economy will be different, the report said.
But the panelists on Thursday were confident of one thing: industries such as aerospace, technology and communications, e-commerce and healthcare will drive the regional economy. These industries include the Air Force Space and Rocket Systems Center in El Segundo and SpaceX in Hawthorne.
But the biggest strength of the South Bay that will move it forward, according to economists, is its diversity and innovation.
“Cultural diversity can enrich our lives with food, art and events,” the report says. “However, businesses also reap significant benefits: FDI supports local workers and city government revenues, and global trade links reduce the cost of doing business and distribute risk.”