Forecast: Southern California to see uneven recovery through 2022

Southern California has reclaimed 70% of the jobs it lost during the COVID-19 pandemic, but the region’s ongoing recovery will be fraught with labor shortages, supply chain disruptions, equity gaps and inflation, according to a new forecast.

The report, prepared by some of the Southland’s top economists, was released Thursday, Dec. 2 during the 12th Annual Southern California Summit, “From Inclusive Recovery to Inclusive Growth.” The online event was sponsored by the Southern California Association of Governments (SCAG).

The strength, resilience and diversity of Southern California’s economy helped prevent a more serious downturn, the study said, but the region is still more than a half million jobs shy of its pre-pandemic total in spite of having added 1.21 million jobs over the past 19 months.

“On the plus side, Southern California’s role as a supply chain leader has never been more important,” SCAG President Clint Lorimore said in a statement. “We’re also seeing remarkable advances in technology and innovation across multiple industry sectors.”

Still, the region’s tourism industry was essentially shut down for months. That, coupled with severe staffing shortages has hurt retailers, restaurants, manufacturers, trucking operations and small businesses.

Speaking Thursday, Dee Dee Myers, senior advisor and director for the Governor’s Office of Business & Economic Development, said the state is working to help unclog the supply chain gridlock. It has slowed the movement of goods through the ports of Los Angeles and Long Beach as a result of labor shortages and increased consumer demand for products.

The backup has often left hordes of container ships waiting near the ports to unload their merchandise.

“The governor has issued an executive order that asks the state to access land for additional container storage,” Myers said.

U.C. Riverside professor Karthick Ramakrishnan, who is also executive director of the  California 100 initiative, said inclusion and equity among minorities and under-represented communities are increasingly import as Southern California regains its economic footing.

“It gets worse over time and is harmful for overall economic growth,” he said. “There is a reduction in human capital investments through education, a reduction of homeownership and adverse health outcomes and associated costs.”

Cargo containers sit stacked at the Port of Los Angeles, Wednesday, Oct. 20, 2021, in San Pedro. (AP Photo/Ringo H.W. Chiu)

The report’s economic outlook and challenges vary from county to county:

— Los Angeles County employment is projected to grow by about 91,000 jobs a year from 2020 through 2025, adding a total of roughly 457,000 jobs. But most will be lower-paying postions that require a high school diploma or less. Beyond that, housing has become increasingly out of reach for many and Black and Hispanic households are more likely to struggle with poverty than their White and Asian counterparts.

— Chapman University predicts that Orange County will add 100,000 jobs between the second quarter of 2021 and the end of the year, bringing total county employment to 98% of employment in the first quarter of 2020. The county’s largest industries as of August were professional and business services, education and health services, leisure and hospitality and manufacturing. Only 17% of residents were able to afford a median-priced, existing home in the county, which topped $1.1 million in June and remained above $1 million through August, the report said.

— The Inland Empire (San Bernardino and Riverside counties) will see its economic recovery driven largely by the strength of its logistics, healthcare and construction industries. If current trends hold, 2021 will see a gain of 69,027 jobs – more than offsetting the 65,692 lost in 2020.

Wallace Walrod, SCAG’s chief economic advisor, said Southern California’s economy continues to recover. He noted that the region’s unemployment rate in October was 6.9%, well below the high of 18.1% in May 2020.

Los Angeles, Orange, Riverside, San Bernardino, Ventura and Imperial counties have collectively demonstrated an economic resilience that has allowed the region to weather the COVID-19 pandemic, he said.

“By next year’s economic summit the region will likely have regained all of the jobs it lost,” Walrod said.

Myers said California has added about 100,000 jobs a month over the past nine months.

The state’s economy fell faster than many others during the worst of COVID-19, she said, but that was because it took swift measures early on to impose temporary business closures and strict mandates to help contain the virus.

And it’s paid off.

“We’ve had better health outcomes and our economy is coming back faster,” she said.