1. 2017 Economic Outlook IREM Los Angeles
February 22, 2017
IREM Los Angeles
Kimberly Ritter-Martinez, Economist
LAEDC Institute for Applied Economics
February 22, 2017
LAEDC: Kimberly Ritter-Martinez

2. Outline U.S. Economy California and Los Angeles County
IREM Los Angeles
February 22, 2017
Outline
U.S. Economy
California and Los Angeles County
Los Angeles County Housing Market
What’s Next? Key Areas to Watch
Los Angeles County Economic Development Corp.
LAEDC: Kimberly Ritter-Martinez

3. IREM Los Angeles
U.S. Economic Growth:
February 22, 2017
2016 Real GDP Growth 1.6%; Forecast for %
% Annual Growth Rate, Quarter-Quarter
Sources: Bureau of Labor Statistics, Forecasts by Wells Fargo
LAEDC: Kimberly Ritter-Martinez

4. U.S. Economy at a Glance, 4Q16 Consumer Sector Business Sector
IREM Los Angeles
February 22, 2017
U.S. Economy at a Glance, 4Q16
Consumer Sector
Business Sector
Government
International Trade
Other Macro Indicators:
Labor Market
Inflation
Los Angeles County Economic Development Corp.
LAEDC: Kimberly Ritter-Martinez

5. U.S. Personal Consumption:
IREM Los Angeles
February 22, 2017
U.S. Personal Consumption:
Consumers are doing the heavy lifting
Annual Growth Rate, Quarter-Quarter
Sources: Bureau of Economic Analysis, forecasts by Wells Fargo
LAEDC: Kimberly Ritter-Martinez

6. Business Fixed Investment
IREM Los Angeles
February 22, 2017
Business Fixed Investment
Annual % Change
Source: US Bureau of Economic Analysis
LAEDC: Kimberly Ritter-Martinez

7. Consumers vs. Businesses
IREM Los Angeles
February 22, 2017
Consumers vs. Businesses
Contribution to % Change in Real GDP
Sources: Bureau of Economic Analysis
LAEDC: Kimberly Ritter-Martinez

8. Consumer Inflation Tame, but...
IREM Los Angeles
February 22, 2017
Consumer Inflation Tame, but...
Percent change from a year ago, 100 =
January 2016: All Items 2.5%; Core +2.3%
Source: US Bureau of Labor Statistics
Kyser Center for Economic Research
LAEDC: Kimberly Ritter-Martinez

9. Interest Rates IREM Los Angeles February 22, 2017 Forecast
Source: Federal Reserve; Forecasts by Wells Fargo
Kyser Center for Economic Research
LAEDC: Kimberly Ritter-Martinez

10. IREM Los Angeles
U.S. Non-farm Job Growth
February 22, 2017
MONTH TO MONTH CHANGES IN THOUSANDS, SEASONALLY ADJUSTED
January 2017: 227,000 Jobs
Source: Bureau of Labor Statistics
Kimberly Ritter-Martinez

11. U.S. Unemployment Rate January, Percent Unemployed (SA)
IREM Los Angeles
February 22, 2017
U.S. Unemployment Rate
January, Percent Unemployed (SA)
Sources: Bureau of Labor Statistics
Kimberly Ritter-Martinez

12. Labor Force Participation Rate
IREM Los Angeles
Labor Force Participation Rate
February 22, 2017
Source: Bureau of Labor Statistics
LAEDC: Kimberly Ritter-Martinez

13. U.S. Wage Growth 3-Month Moving Average of Median Wage Growth
IREM Los Angeles
February 22, 2017
U.S. Wage Growth
3-Month Moving Average of Median Wage Growth
Recession
Source: Atlanta Federal Reserve Wage Tracker
LAEDC: Kimberly Ritter-Martinez

14. Median Household Income
IREM Los Angeles
Median Household Income
February 22, 2017
Median HH Income in Thousands of 2015 Dollars
Source: Census Bureau, Income and Poverty
in the United States, 2015
LAEDC: Kimberly Ritter-Martinez

15. The State and Local Economies IREM Los Angeles February 22, 2017
LAEDC: Kimberly Ritter-Martinez

16. California vs. U.S. Economic Growth
IREM Los Angeles
February 22, 2017
California vs. U.S. Economic Growth
Indexed 1990 = 100
Annual % Change
Source: US Bureau of Economic Analysis, IHS
Kyser Center for Economic Research
LAEDC: Kimberly Ritter-Martinez

17. U.S. & California Annual Job Growth
IREM Los Angeles
U.S. & California Annual Job Growth
February 22, 2017
December YTY % change in nonfarm jobs, seasonally adjusted
Source: US BLS, CA EDD
LAEDC: Kimberly Ritter-Martinez

18. California Non-farm Job Growth
IREM Los Angeles
California Non-farm Job Growth
February 22, 2017
Month to month changes in thousands, seasonally adjusted
December 2016: 3,700 Jobs m/m and 332,500 | 2.0% y/y
Source: CA EDD, Labor Market Information Division
Kimberly Ritter-Martinez

19. Job Trends by California Metro Area
IREM Los Angeles
February 22, 2017
Job Trends by California Metro Area
Metro Area (YTY Job Gain Dec.)
Annual percentage change in nonfarm jobs (SA)
Source: CA EDD, Labor Market Information Division
LAEDC: Kimberly Ritter-Martinez

20. Educational Attainment by County
IREM Los Angeles
Educational Attainment by County
February 22, 2017
Population 25 years and older
County
% High School
% Bachelors or Higher
Los Angeles
77.3%
30.3%
Orange
84.3%
37.7%
Riverside
80.1%
20.9%
San Bernardino
78.6%
19.0%
San Diego
86.0%
35.7%
Ventura
83.1%
31.7%
Santa Clara
87.0%
47.9%
Source: Census, ACS Estimates 5-Yr Averages
LAEDC: Kimberly Ritter-Martinez

21. Educational Attainment by Age in L.A. County
IREM Los Angeles
February 22, 2017
Educational Attainment by Age in L.A. County
Source: U.S. Census Bureau, ACE Year Estimates
LAEDC: Kimberly Ritter-Martinez

22. SoCal Unemployment Rates
IREM Los Angeles
February 22, 2017
SoCal Unemployment Rates
Source: CA EDD, Labor Market Information Division
LAEDC: Kimberly Ritter-Martinez

23. Los Angeles County Largest Industries
IREM Los Angeles
February 22, 2017
Los Angeles County Largest Industries
Industry
2016 Average Employment
% of Total
Health Care & Social Assistance
646,300
14.8%
Government/Public Sector
574,500
13.2%
Leisure & Hospitality
505,500
11.6%
Retail Trade
429,500
9.8%
Manufacturing
354,800
8.1%
Professional, Scientific & Technical Services
283,100
6.5%
Total Nonfarm Jobs
4,362,200
Source: CA EDD, Labor Market Information Division
Kyser Center for Economic Research
LAEDC: Kimberly Ritter-Martinez

24. Los Angeles County Employment Trends
IREM Los Angeles
February 22, 2017
Los Angeles County Employment Trends
December 2016: Gain +1.3%, +58,600 jobs (y/y), NSA
Industry, Annual % Change
Number of Jobs, Thousands
Source: CA EDD, Labor Market Information Division
LAEDC: Kimberly Ritter-Martinez

25. The Housing Market IREM Los Angeles February 22, 2017
LAEDC: Kimberly Ritter-Martinez

26. 5 Critical Questions for 2017
IREM Los Angeles
February 22, 2017
Housing Market:
5 Critical Questions for 2017
Will homeownership rate rise from recent lows?
Will home prices continue to outpace wages and inflation
How will higher mortgage rates impact home sales?
Will first-time homebuyers return to the housing market?
Has the apartment market topped out?
LAEDC: Kimberly Ritter-Martinez

27. Homeownership Rates Beginning to stabilize?
IREM Los Angeles
February 22, 2017
Homeownership Rates
Beginning to stabilize?
Percent, annual, not seasonally adjusted
Source: Federal Reserve Bank of St. Louis
LAEDC: Kimberly Ritter-Martinez

28. Median Prices in Southern California Existing Single-Family Homes
IREM Los Angeles
Median Prices in Southern California
Existing Single-Family Homes
February 22, 2017
Source: California Association of Realtors
Kyser Center for Economic Research
LAEDC: Kimberly Ritter-Martinez

29. Santa Clara (Silicon Valley)
IREM Los Angeles
Home Affordability in California
February 22, 2017
California
Santa Clara (Silicon Valley)
Los Angeles
Median Home Price (3q16)
Single-Family Homes
$515,940
$1,000,000
$536,720
Median HH Income
( )
$61,818
$96,310
$56,196
Minimum Qualifying Income (3q16)
$100,290
$194,380
$104,330
Housing Affordability Index (3q16) 31 22 26
Source: US Census ACS 5-year estimates, C.A.R.
Kyser Center for Economic Research
LAEDC: Kimberly Ritter-Martinez

30. SoCal Apartment Rents IREM Los Angeles February 22, 2017
Source: Real Estate Research Council, Harvard Joint Center for Housing Studies
Kyser Center for Economic Research
LAEDC: Kimberly Ritter-Martinez

31. Residential Building Permits Issued in Los Angeles County
IREM Los Angeles
February 22, 2017
Residential Building Permits Issued in Los Angeles County
Source: CIRB, California Home Building Foundation,
Kyser Center for Economic Research
LAEDC: Kimberly Ritter-Martinez

32. Housing Market: Where are we headed? Fundamentals are strong
IREM Los Angeles
February 22, 2017
Housing Market:
Where are we headed?
Fundamentals are strong
Job and income growth are positive
Lending standards are reasonable
Household formation is rebounding
And yet....
Supply well below long-run average
Boomers are not moving
Share of first-time buyers is LOW
Affordability-constrained Millennials looking outside California
LAEDC: Kimberly Ritter-Martinez

33. U.S. Economy: Key Areas to Watch
IREM Los Angeles
February 22, 2017
U.S. Economy: Key Areas to Watch
Trade Policy
Corporate Tax Reform and Investment
Regulation
Health Care
Immigration
Infrastructure Policy
LAEDC: Kimberly Ritter-Martinez

34. Conclusion Economic growth continues Job gains solid Consumer momentum
IREM Los Angeles
February 22, 2017
Conclusion
Economic growth continues
Job gains solid
Consumer momentum
Real estate/construction outlook good
Rising but still low energy prices
Consumer credit is expanding
Fed policy slowly firming but will be cautious
But.....
Weak global economy/geopolitical risks
Political gridlock/policy uncertainty in U.S.
Health Care???
Housing shortage in California
LAEDC: Kimberly Ritter-Martinez

35. For Further Insight into the Local Economy Visit:
IREM Los Angeles
February 22, 2017
Thank you!
For Further Insight into the Local Economy Visit:
LAEDC Research & Data:
LAEDC: Kimberly Ritter-Martinez