Recent unemployment numbers show a few positive gains Friday, but there’s a long way to go until markets can start to approach pre-Great Recession levels, according to the chief economist for the Los Angeles County Economic Development Corp.
“It’s a good news, bad news report — not unlike what we’ve been seeing,” said Robert Kleinhenz, chief economist at the Kyser Center for Economic Research.
“We welcome the improvement in the unemployment rate and the job gains that we are seeing, and it’s evident that we continue to see momentum in the labor market — that’s good, we just wish it were stronger,” he said.
Total nonfarm payroll employment increased by 171,000 in October, and the unemployment rate was essentially unchanged at 7.9 percent, the U.S. Bureau of Labor Statistics reported. Employment rose in professional and business services, health care and retail trade.
However, Kleinhenz weighted his optimism with housing and construction numbers, which he said were among the more significant bellwethers due to all of the corollary impacts, such as housing products, appliances and retail purchases associated with home-ownership.
“Our center only does a forecast out until 2013, and we’re still going to be at about half of the normal long-run number of housing permits — both single-family and multifamily — of what we would consider to be normal in the California housing market in 2013,” Kleinhenz said. “So we still have a ways to go for that segment to recover.”
Kleinhenz also talked about some of the concerns about next year if the rate of improvement does not pick up, because there are several factors that could push the national economy off the edge of a “fiscal cliff” unless the economy picks up steam.
The concern regarding the economy is that the end of Bush-era tax cuts, an anticipated tightening of money supply by the Federal Reserve and reductions in government spending could significantly impact the GDP.
“If we fall off the full fiscal cliff, it could wreak havoc on the economy in the first half of the fiscal year and, essentially, cause a recession in the first half of the year,” he added.
The LAEDC, the region’s premier economic development leadership organization, is a private, non-profit public benefit organization established in 1981, according to a statement.