Southern California is in an optimal position to withstand the impact of a potential recession, economists at the 13th Annual Southern California Economic Summit projected this month.
The summit included nearly 400 regional economic leaders, who discussed the ongoing concerns over inflation and the global economy.
According to a report by SCAG’s (Southern California Association of Governments) economic roundtable, the region could weather a recession due to strong outlooks in the information, transportation, warehousing and arts, entertainment and recreation sectors — the three sectors experiencing robust job growth.
Participation in the labor force has returned to pre-pandemic levels, with heavy demand for construction jobs as a result of an increase in housing development. The region’s GDP per capita has also gone up by 7.6% this year.
“Southern California is a major economic driver, not only for the region but the world,” said Wallace Walrod, chief economist for the Orange County Business Council. “As a result, we are in a better position than most to withstand some of the negative economic pressures that are surfacing.”
A recession could still dampen the local economy, the experts said. It could lead to a significant downward shift in the labor market, a slowdown in consumer spending and a rise in unemployment. Real GDP growth in Los Angeles County is expected to decrease to 1.9% this year and 1.3% next year.
“L.A. County’s strong post-COVID recovery is at risk of a slowdown over the next five years,” said Shannon Sedgwick, director of the Institute for Applied Economics at the Los Angeles County Economic Development Corporation. “The deep socioeconomic inequities spotlighted by the pandemic remain and are now seen with lower-income households disproportionately feeling the effects of inflation.”