The Economic
The Nation,
State and
Outlook
the Antelope Valley
February 24, 2012
Mark Schniepp
Director
Economic Outlook
Not Quite through
the tunnel yet
When is the recession over ?
February 24, 2012
Mark Schniepp, Director
Recent Economic Evidence
• Significant improvement - last 10 weeks
- most indicators now rising steadily
index
October 2001=100
Rasmussen Consumer Confidence Index
February 2008 - February 20, 2012
95
90
85
80
75
70
65
60
55
Feb-08
Aug-08
Feb-09
Aug-09
Feb-10
Aug-10
Feb-11
Aug-11
Feb-12
Real Retail Sales / U.S.
billions of 2011
dollars SAAR
January 2006 - January 2012
410
400
390
380
370
360
350
Jan-06
Jan-07
Jan-08
Jan-09
Jan-10
Jan-11
Jan-12
millions
of vehicles
New Auto and Light Truck Sales / U.S.
January 2009 - January 2012
14
13
12
11
10
9
8
Jan-09
Jul-09
Jan-10
Jul-10
Jan-11
Jul-11
Jan-12
Index of Industrial Production /
index
January 2002 - January 2012
101
98
95
92
89
86
83
Jan-02
Jan-04
Jan-06
Jan-08
Jan-10
Jan-12
Index
Dow Jones Industrial Average
November 23, 2010 - February 23, 2012
.
13,000
12,500
12,000
11,500
11,000
10,500
Nov-10
Feb-11
May-11
Aug-11
Nov-11
Feb-12
index
2004 = 100
Index of Leading Indicators / U.S.
January 2002 - January 2012
120
117
114
111
108
105
102
99
96
Jan-02
Jan-04
Jan-06
Jan-08
Jan-10
Jan-12
Existing Home Sales / U.S.
millions of
sales, SAAR
5.5
January 2009 - January 2012
5.0
4.5
4.0
3.5
3.0
Jan-09
Jul-09
Jan-10
Jul-10
Jan-11
Jul-11
Jan-12
Housing Starts / U.S.
millions of
units, SAAR
January 2002 - January 2012
2.2
1.9
1.6
1.3
1.0
0.7
0.4
Jan-02
Jan-04
Jan-06
Jan-08
Jan-10
Jan-12
Los Angeles Times, February 8, 2012, Page B2
index
NAHB Housing Market Index / U.S.
February 2007 - February 2012
40
35
30
25
20
15
10
5
Feb-07
Feb-08
Feb-09
Feb-10
Feb-11
Feb-12
Recent Economic Evidence
• Significant improvement - last 3 months
- most indicators now rising steadily
• Despite modestly growing GDP, the labor
market unimpressed in 2011
• Though the nation created 1.6 million jobs,
unemployment remains high
• 25 million Americans seek full time work
• How is the momentum going into 2012 ?
8.3%
Los Angeles times, January 7, 2012, front page
Unemployment Rate / US.
seasonally adjusted
percent
January 2006 - January 2012
10
9
8
7
6
5
4
Jan-07
Jan-08
Jan-09
Jan-10
Jan-11
Jan-12
month-over-month
change
(thousands of jobs)
Private Sector Job Creation / US.
December 2009 - Jnuary 2012
300
0
23 months = 3.5 million jobs
-300
-600
-900
Jan-09
8.8 million jobs
Jul-09
Jan-10
Jul-10
Jan-11
Jul-11
Jan-12
U.S. Economic Summary
• Consumers are feeling better and
spending more
• Factories are producing more goods
• Autos are selling again; U.S. automakers
reported their three best months of sales
(post recession) in November, December,
January
• The stock market has rallied sharply
• Business is hiring more / the u-rate is . . . .
U.S. Consumer Price Inflation
percent
January 2006 - January 2012
6
2.7 %
4
2
0
-2
Jan-06
Jan-07
Jan-08
Jan-09
Jan-10
Jan-11
Jan-12
What about
California ?
Job Creation / California.
June 2009 - December 2011
jobs
seasonally adjusted
60,000
40,000
20,000
0
-20,000
-40,000
327,000 jobs
-60,000
-80,000
-100,000
-120,000
Jun-09
Dec-09
Jun-10
Dec-10
Jun-11
Dec-11
Recent Evidence / California
•
•
•
•
•
Technology sector leading the charge
Exports were explosive in 2011
Tourism also rising in all major markets
Manufacturing growing again, but slowly
Hiring is picking up, mostly in coastal markets
but recently, inland areas are creating
jobs
• Demographics are largely responsible for the
abnormally high unemployment rates
• . . . and will also be responsible for the
Value of Exports / California Ports
billions of
dollars
2001 Q1 - 2011 Q4
50
45
40
35
30
25
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
thousands
of jobs
Employment in Technology Services / California
December 2005 - December 2011
580
Scientific and technical services
560
540
520
500
480
460
Dec-05
Dec-06
Dec-07
Dec-08
Dec-09
Dec-10
Dec-11
Employment in Computer Products Manufacturing
California
jobs
December 2005 - December 2011
49,000
47,000
45,000
43,000
41,000
39,000
37,000
Dec-05
Dec-06
Dec-07
Dec-08
Dec-09
Dec-10
Dec-11
thousands
of jobs
Manufacturing Employment / California
December 2005 - December 2011
1,500
1,400
1,300
1,200
Dec-05
Dec-06
Dec-07
Dec-08
Dec-09
Dec-10
Dec-11
thousands
of jobs
Leisure & Hospitality Employment / California
December 2005 - December 2011
1,600
1,575
1,550
1,525
1,500
1,475
1,450
Dec-05
Dec-06
Dec-07
Dec-08
Dec-09
Dec-10
Dec-11
Average Hotel Occupancy Rate / Santa Clara County
Seasonally Adjusted
November 2006 - November 2011
percent
73
69
65
61
57
53
Nov-06
Nov-07
Nov-08
Nov-09
Nov-10
Nov-11
Average Hotel Occupancy Rate / Orange County
Seasonally Adjusted
November 2006 - November 2011
percent
76
72
68
64
60
Nov-06
Nov-07
Nov-08
Nov-09
Nov-10
Nov-11
Disneyland Attendance / Anaheim
millions
of visitors
17
1991 - 2011
16
15
14
13
12
11
10
9
1991
1993
1995
1997
1999
2001
2003
2005
2007
2009
2011
Los Angels Times, December 17, 2011, B1
Los Angels Times, January 21, 2012, front page
Population Age 18 to 24 / California.
millions
of people
1970 - 2010
4.3
4.1
3.9
3.7
3.5
3.3
3.1
2.9
2.7
2.5
1970
1975
1980
1985
1990
1995
2000
2005
2010
Population Growth / California
percent
change
1988 - 2010
2.5
2.0
1.5
1.0
0.5
0.0
88
90
92
94
96
98
00
02
04
06
08
10
New Housing Production / California
thousands of
units permitted
November 2005 - November 2011
20
16
12
8
4
0
Nov-05
Nov-06
Nov-07
Nov-08
Nov-09
Nov-10
Nov-11
persons
per house
Average Household Size / California
1989 - 2011
3.00
2.96
2.92
2.88
2.84
2.80
1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011
Question?
• If the state is still growing, and housing
inventories are low, then why is
there
no new construction?
• Household formation has dried up
- unemployed move in with
Mom/Dad
- or they never moved out !
• This is an employment induced
temporary problem
• … with growing likelihood that a
dramatic
breakout in housing
Summary / California
 Technology, Exports, and Tourism are the
current engines of growth
 Construction and Manufacturing
show
little recovery to date
 Public sector employment in decline
 Hotel occupancy now at pre-recession levels
 Commercial real estate slowly rebounding
 Inland counties have lagged the recovery
in California but have recently joined
with sharp increases in employment
since the summer
Cumulative Job Growth by County
percent
2.0
December 2010 through December 2011
San Diego
Ventura
Inland Empire
Los Angeles
1.5
Orange
1.0
0.5
0.0
-0.5
Dec-10
Mar-11
Jun-11
Sep-11
Dec-11
Antelope Valley
Growth
In California
Fastest Growing Counties /
California 2008 - 2011
County
Placer
Riverside
Imperial
Antelope
Valley
Tulare
Kern
Fresno
San Joaquin
Contra Costa
Population Growth
5.3
4.9
4.7
4.5
4.1
3.5
3.1
2.7
2.7
2.7
Population Growth / Antelope Valley
people
1991 - 2011
14,000
12,000
10,000
8,000
6,000
4,000
2,000
0
1991
1993
1995
1997
1999
2001
2003
2005
2007
2009
2011
Quiz part I:
What is the Population of
California?
(census estimate)
(a) 34.3 million
 (b) 37.3 million
(c) 40.5 million
(d) Just tell us the answer and
get on with it . . . . !
Quiz part II:
What will be the Population of
California in 2020 ?
(a) 38 million
(b) 40 million
 (c) 42.8 million
(d) Who cares?
Quiz part III:
Where are these 5.4 million
people
going to live?
 (a)
 (b)
Orange County
Santa Clara County
(c) Coachella Valley
(d) Victor Valley
(e) Antelope Valley
(f) San Joaquin Valley
(g) Sacramento Valley
dollars
Home Price Advantage: Antelope Valley and Southern
California Markets
2011
$600,000
$514,386
$500,000
$387,500
$400,000
$419,873
$305,955
$300,000
$200,000
$157,400
$100,000
Antelope
Valley
Los Angeles Santa Clarita
County
Valley
Ventura
County
Orange
County
thousands
of people
Population Gain / Southern California
1990 - 2020
500
450
150,000 - 250,000
people per year
400
350
300
250
200
150
100
50
0
1990
1995
2000
2005
2010
2015
2020
units
permitted
New Housing Units / Southern Califonria.
1990 - 2020
120,000
100,000
80,000
60,000
40,000
20,000
0
1990
1995
2000
2005
2010
2015
2020
2011 Economic Smmary
Antelope Valley
• Recent job loss was deep and broad based
• Construction, manufacturing, and the retail
sector experienced the greatest
loss of jobs
• Unemployment leaped to an estimated 16 %
• Commercial markets weakened in tandem
with the labor markets
• The retail fallout has been sharp
• Home production . . . well, negligible
 There is good news on the homeowner
Recent Evidence / Antelope
Valley
 The regional economy is slowly
recovering
– like other inland areas of California





Population growth remains positive
Job creation has been intermittent
Residential entitlements are prolific
Home prices have finally stabilized
Affordability is extremely high relative
to surrounding
communities
percent
change
15
Real Retail Sales Growth / Antelope Valley
1995 - 2011
10
5
0
-5
-10
-15
-20
1995
1997
1999
2001
2003
2005
2007
2009
2011
Labor
Markets
Job Creation / Antelope Valley
monthly job
creation
.
December 2006 - December 2011
600
400
200
0
-200
-400
10 of 24 months
= net loss of 100 jobs
-600
-800
Dec-06
Dec-07
Dec-08
Dec-09
Dec-10
Dec-11
Total Jobs Created / Antelope Valley.
number of...
jobs created ..
2000 - 2011 .
4,000
2,000
0
-2,000
-4,000
-6,000
00
01
02
03
04
05
06
07
08
09
10
11
Employment in Healthcare / Antelope Valley
jobs
September 2006 / September 2011
8,750
8,500
8,250
8,000
7,750
7,500
7,250
7,000
6,750
Sep-06
Sep-07
Sep-08
Sep-09
Sep-10
Sep-11
Employment in Educational Services
Antelope Valley
jobs
September 2006 - September 2011
800
750
700
650
600
550
500
450
400
Sep-06
Sep-07
Sep-08
Sep-09
Sep-10
Sep-11
jobs
Financial Activities Employment / Antelope Valley
.
September 2006 - September 2011
3,200
3,100
3,000
2,900
2,800
2,700
2,600
Sep-06
Sep-07
Sep-08
Sep-09
Sep-10
Sep-11
Manufacturing Employment / Antelope Valley.
jobs
September 2006 - September 2011 .
9,100
8,800
8,500
8,200
7,900
7,600
7,300
Sep-06
Sep-07
Sep-08
Sep-09
Sep-10
Sep-11
jobs
Professional and Business Services Employment .
Antelope Valley
September 2006 - September 2011
5,000
4,500
4,000
3,500
3,000
Sep-06
Sep-07
Sep-08
Sep-09
Sep-10
Sep-11
Construction Employment / Antelope Valley...
jobs
September 2006 - September 2011
7,000
6,000
5,000
4,000
3,000
2,000
Sep-06
Sep-07
Sep-08
Sep-09
Sep-10
Sep-11
New Residential Units / Antelope Valley
units
permitted
1991 - 2011
5,000
4,000
3,000
2,000
1,000
0
91
93
95
97
99
01
03
05
07
09
11
millions
of dollars
New Commercial and Industrial Investment
Antelope Valley
1997 - 2011
100
80
60
40
20
0
97
99
01
03
05
07
09
11
Employment in State and Local Government
Antelope Valley. ..
jobs
September 2006 - September 2011
15,250
14,750
14,250
13,750
13,250
Sep-06
Sep-07
Sep-08
Sep-09
Sep-10
Sep-11
Residential
Real Estate
The most frustrating
sector of the economy
Existing Home Sales / California
thousands
of sales
December 2007 - December 2011
600
500
400
300
200
Dec-07
Jun-08
Dec-08
Jun-09
Dec-09
Jun-10
Dec-10
Jun-11
Dec-11
thousands
of dollars
Median Home Selling Price / California
December 2007 - December 2011
450
400
350
300
250
200
Dec-07
Dec-08
Dec-09
Dec-10
Dec-11
Median Home Selling Prices
California Counties December 2011
County
San Diego
Orange
Los Angeles
Inland Empire
Ventura
Antelope Valley
San Fernando
Valley
California
Price
$359,930
%
change
-4.2
-3.7
-7.3
$484,630
-3.3
$306,950 -11.4
-5.8
$172,430 -10.1
-6.2
$391,060
% Change
From Peak
-42.2
-37.5
-51.0
-55.7
-45.0
-61.4
-45.6
-51.9
Median Home Selling Price .
thousands
of dollars
December 2006 - December 2011
375
325
Palmdale
275
225
175
Lancaster
125
75
Dec-06
Dec-07
Dec-08
Dec-09
Dec-10
Dec-11
Existing Home Sales / Antelope Valley
sales
2001 - 2011
10,000
8,000
6,000
4,000
2,000
01
02
03
04
05
06
07
08
09
10
11
Los Angeles Times, February 18, 2011, page B2
Los Angeles Times, April 20, 2011, page B1
Foreclosures / California
number
2006 Q1 - 2011 Q4
80,000
70,000
60,000
50,000
40,000
30,000
20,000
10,000
0
2006
2007
2008
2009
2010
2011
Notices of Default / California
number
2006 Q1 - 2011 Q4
140,000
120,000
100,000
80,000
60,000
40,000
20,000
0
2006
2007
2008
2009
2010
2011
Foreclosures / Antelope Valley
number
October 2008 - February 2012
2,500
2,000
1,500
Lancaster
1,000
Palmdale
500
0
Oct-08
Mar-09
Aug-09
Jan-10
Jun-10
Nov-10
Apr-11
Sep-11
Feb-12
Los Angeles Times, January 12, 2012, page B3
Housing Summary / California
• Values have stabilized ?
• Purchase market held back by credit conditions
and labor markets
• Lack of demand along with distressed
inventory
keeps housing values from
rising
• Credit conditions are tight because values have
yet
to rebound
• Catch 22: prices won’t rise until credit markets
loosen; credit markets won’t loosen until
values start rising again
• Distressed inventory will begin to subside in
The Forecast
5 year
Outlook
QuickTime™ and a
TIFF (Uncompressed) decompressor
are needed to see this picture.
2012 Antelope Valley Forecast
Summary
• 2011 was a transition year: the economic
recovery will be more convincing in
2012
throughout Southern California
• Though labor markets are already adding
jobs, the
pace of expansion will
accelerate and broaden
• Home sales finally improve in 2012 due to
high
affordability, and more new jobs
• Job creation, home sales, and consumer
spending return to more normal levels in
2013
thousands
of jobs
Total Job Creation / Antelope Valley
.
1996 - 2016
4
3
2
1
0
-1
-2
- 6,700 jobs
-3
-4
-5
1996
1998
2000
2002
2004
2006
2008
2010
2012
2014
2016
Unemployment Rate / Antelope Valley.
2000 - 2016
percent
16
14
12
10
8
6
4
2000
2002
2004
2006
2008
2010
2012
2014
2016
Population Growth / Antelope Valley
people
1996 - 2016
12,000
10,000
8,000
6,000
4,000
2,000
0
1996
1998
2000
2002
2004
2006
2008
2010
2012
2014
2016
inmigrants
minus
outmigrants
Net Migration / Antelope Valley
1996 - 2016
10,000
8,000
6,000
4,000
2,000
0
-2,000
1996
1998
2000
2002
2004
2006
2008
2010
2012
2014
2016
Population / Antelope Valley.
thousands
of persons
1996 - 2016
420
40,000
390
432
392
356
360
330
304
300
284
270
1996
2001
2006
2011
2016
thousands
of jobs
Professional Services Employment / Antelope Valley
1996 - 2016
5.0
4.5
4.0
3.5
3.0
2.5
1996
1998
2000
2002
2004
2006
2008
2010
2012
2014
2016
New Housing Production / Antelope Valley
.
homes
permitted
1996 - 2016
5,000
10,50
0
4,000
3,000
2,000
1,000
0
1996
1998
2000
2002
2004
2006
2008
2010
2012
2014
2016
Average Household Size / Antelope Valley
people
per house
1996 - 2016
3.50
3.45
3.40
3.35
3.30
3.25
3.20
1996
1998
2000
2002
2004
2006
2008
2010
2012
2014
2016
Existing Home Sales / Antelope Valley
sales
2000 - 2016
10,000
8,000
6,000
4,000
2,000
2000
2002
2004
2006
2008
2010
2012
2014
2016
thousands
of dollars
Median Home Selling Price / Antelope Valley.
1996 - 2016
350
300
250
200
150
100
50
1996
1998
2000
2002
2004
2006
2008
2010
2012
2014
2016
Real Retail Sales / Antelope Valley
billions of
constant 2010
dollars
1996 - 2016
3.3
3.1
2.9
2.7
2.5
2.3
2.1
1.9
1.7
1996
1998
2000
2002
2004
2006
2008
2010
2012
2014
2016
Southern California Forecast
Summary
 The recovery will lag in the inland areas, but over the
long run
growth will be stronger
 A much stronger expansion of labor markets will occur
by 2013, reaching a peak in 2014
 The unemployment rate will remain high for years to
come
as more new workers enter the labor
force
 Population grows slightly faster, inland areas grow
much faster than the coast
 Home prices rise in 2012 ? …… or beyond ?
 Prices rise when distressed properties account for a
smaller share of total transactions
 Housing production ultimately increases throughout the
The Economic Timeline
• U.S. economic expansion underway now
• Regional expansion more evident by Q3 or
Q4
• Solid job creation sustainable:
2012 Q4
• Unemployment rate falling throughout year
• Foreclosures subsiding by 2012 Q4
• More new housing underway this year,
with breakout in 2013
• Fed raises rates: late 2014 / early 2015
Antelope Valley
2012 Economic
Outlook