Let's start with the good news.
The coming year will feature some economic bright spots for Los Angeles County, according to a financial forecast released Wednesday.
"It's much gloomier than the forecast released in February," says Economist Jack Kyser, "so many things have happened, nasty news, but by the end of the year, we should start to see progress."
The health care services sector likely will hold its own, private education will continue growing, and the federal government's stimulus program will bolster public and private construction projects, according to the forecast by the Los Angeles County Economic Development Corp., a private, nonprofit business leadership organization.
Now for the not so good.
California's unemployment rate will hit 11.6 percent this year, it said.
State Controller John Chiang says it's a delicate time.
"We're going to see continued economic struggles," he said during a breakfast meeting Wednesday in Los Angeles, "until we get a good basing which doesn't happen fast. And with jobless rates where they are, we just have to work through these economic times."
International trade continues to decline, manufacturing-sector unemployment is still rising, and tourism and home construction will keep dropping, the forecast found.
"The year 2009 is proving to be quite difficult for Los Angeles County's economy," according to the LAEDC report. "The outlook for the balance of 2009 and 2010 calls for even more intense pain. Several of the county's major industries will face significant challenges in 2009 and 2010."
Nonfarm employment in the county this year is expected to drop by 4.1 percent, or 168,000 jobs, and another 2 percent, or 78,700 jobs, in 2010.
"In 2010, the unemployment rate should average 12.8 percent, as business will be cautious in rehiring until the recovery is well-established," the forecast found.
The report noted that an even more serious hit to Los Angeles County's economy could come in 2011.
"While the full impact would probably not be felt until 2011, the biggest single risk for the county is the Defense Department's potential stoppage of Boeing's C-17 program," according to the report. "Some 5,000 employees assemble or support this plane in Long Beach. They are supported by thousands more workers among the county's subcontractor base."
"We saw this coming," said LA County Supervisor Don Knabe, "we started putting money away for a rainy day fund. Left to our own operation, we could survive this. But these second and third round cuts around the state, it remains to be seen."
Statewide, the economy will continue to struggle for the rest of the year, with only limited improvement expected in 2010.
In addition to the continuing recession, the restricted water supply puts the state's agriculture industry at risk, along with "all urban areas that rely on water traversing the Sacramento-Bay Delta," the report found.
The state's unemployment rate is expected to average a "painful" 11.6 percent this year, it said.
"The economic downturn should hit bottom by the end of 2009," according to the report. "When the recovery finally begins, growth will be moderate at best. Firms will be reluctant to hire until they are certain the recovery is `for real.' As a result the state's labor markets will weaken further in 2010, with nonfarm employment declining by 2.1 percent, or by 296,000 jobs."
"... There's no doubting it. The near-term outlook for the California economy is pretty bleak," according to the report. "The state will see a real recovery and economic expansion, but not before 2011. Until then the challenge
for everyone -- business firms, workers, all levels of government -- will be to cope with the downturn and its ongoing consequences."
