LONG BEACH -- The job market will grow. Housing prices will level off. And the region could get a boost from an increased retail sales tax.

Those are some of the predictions of Cal State Long Beach's 10th Annual Regional Economic Forecast released today.

The report's authors also worry that inflation and housing affordability will continue to plague area consumers in 2004 and 2005.

More than 300 business executives and city officials are expected to hear today's morning presentation at the Hyatt Regency hotel in downtown Long Beach.

"I think the No. 1 issue is that we should get some stronger employment going into next year," said chief author Joe Magaddino, chairman of CSULB's Economics Department.

The report forecasts .08 percent job growth for Los Angeles County, which is low by historical standards, but is considered a bright contrast with the past two years, which saw massive cutbacks by companies in most sectors.

In 2005, the report shows job growth rising by a more robust 1.5 percent, with job gains in most sectors over the next two years - some of the largest gains coming from the retail, hospitality and manufacturing sectors.

The report also reflects government job losses expected from state budget cuts, though those cuts are expected to be offset by employment gains in the private sector.

Some experts called the economic forecast conservative.

"I am surprised that they are saying it will be so slow," said Brad Kemp, a labor market consultant with the Economic Development Department's Los Angeles area offices.

Hiring at temporary employment agencies is picking up, a primary indicator of job creation, Kemp noted.

"We're starting to see some numbers come up in some industries," he said.

Slight uptick
March's 6.1 percent unemployment rate for L.A. County shows nominal improvement over the same period in 2003, which was 6.6 percent. Unemployment rose to 8 percent in July 2003.
The recession of the past few years did not affect Southern California as much as the rest of the nation. That may account for the economic forecast's conservative outlook.

The region has a higher economic standard over the last year to meet than does the rest of the nation, said Sung Won Sohn, chief economist for Wells Fargo & Co.

"Southern California never really went into recession," Sohn said. "Southern California, and especially the Long Beach area, has and will continue to perform pretty well."

Co-author Lisa Grobar said she believes the forecast portrays the region's economy as decidedly upbeat.

"We see this economy improving," Grobar said. "We think we are in an era of accelerating economic growth."

But ...
There are some caveats, she said.
Worries about housing affordability are outlined in the report, a barometer for the five-county region surrounding Los Angeles, which forecasts a leveling off in home prices.

Grobar said she believes the market could cool in 2004 or 2005, and an expected rise in interest rates could sour buyers' appetites.

Mortgage rates, the authors say, will begin to rise if Federal Reserve Board Chairman Alan Greenspan raises the prime lending rate a quarter percentage point at a June meeting, as some economists are predicting.

"We feel relatively confident in our forecast of rising interest rates," Grobar said. "This market is going to slow. It simply cannot go on appreciating over 20 percent a year."

Long Beach residents in 2003 saw a relatively good year, according to the report.

The city experienced a gain of more than 5,000 jobs in wholesale trade, transportation and warehousing, and 2.9 million passengers used the Long Beach Airport, a nearly 98 percent increase in usage thanks to the establishment of service by JetBlue.

Hospitality key

The report shows employment gains in 2003 for the city in the hospitality industry, which employs 20,000 people who work at hotels, restaurants and other service industries.

And the city could get a boost from an anticipated increase in retail sales, which saw growth in late 2003, and shows the promise of building momentum later this year and into 2005.

"We're forecasting 5 percent retail growth for 2004," said Ellen Tolley, a spokeswoman for the National Retail Federation.

In 2003, the nation saw 3.9 percent growth in retail sales.

"Last year was a tough year for retailers," Tolley said, adding that sales growth of between 4 percent and 6 percent is considered a typical year. "We've already seen that this year, it seems that sales are increasing across all sectors."