They blame the Federal Reserve and its efforts to tame inflation
By JONATHAN LANSNER, | Orange County Register
A mild, “garden-variety” recession will slash Southern California hiring by 88% this year and lead to more local job losses next year.
The latest crystal ball reading by Cal State Fullerton economists Anil Puri and Mira Farka predicts essentially no job growth in the four-county region during the next two years. That’s a sharp contrast from bosses restaffing at a 4.7% annual rate in 2021-22 following pandemic lockdowns. That hiring spree was nearly five-fold swifter than job creation over the previous two decades.
And what’s the key culprit behind the sluggishness detailed in the report released Thursday, April 27 by the Woods Center for Economic Analysis and Forecasting? As we enter forecast season, it’s a solid prediction the Federal Reserve and its continued efforts to tame inflation will be the most-mentioned variable in most projections.
The Fullerton forecast is based “with what the Fed is saying they will do, which is keep interest rates higher, longer,” Puri says. “And given where we are, that is going to lead to a recession. We already see things slowing down in terms of employment and purchasing, but it’s not enough – yet.”
Unfortunately for Southern Californians who need a paycheck, that Fed-induced cooldown is predicted to change bosses’ thinking about how many workers they need.
My trusty spreadsheet analyzed the forecast’s data, which shows Southern California employers will add 39,000 jobs this year, a sharp slowing from hiring that averaged 338,000 a year in 2021-22. That’s a 88% drop in job growth. And in 2024, Fullerton economists predict the four-county region will lose 39,000 jobs.
And here’s how it breaks down, geographically speaking …
Los Angeles County: 45,000 more jobs this year vs. 186,500 added a year in 2021-22, or a 76% drop. In 2024, 55,000 cuts. That will help push unemployment from an average of 5.8% this year to 6.4% in 2024.
Orange County: 7,000 more jobs this year vs. 69,500 added a year in 2021-22, or a 90% drop. In 2024, 10,000 cuts. Unemployment averages 3.6% this year to 4.2% in 2024.
Inland Empire: 13,000 fewer jobs this year vs. 82,000 added a year in 2021-22. In 2024, expect 26,000 hires. That will help push unemployment to 5.4% in 2024 from an average 4.7% this year.
“The question is how severe (the recession) will be. It could get ugly if a banking crisis flares up,” Puri says.
It’s not just inflation creating business challenges. The lack of people available to be hired is also crimping the economy.
“One of the remarkable phenomena of the post-pandemic economy has been the acute shortage of workers, both at the national and local levels,” the report said.
“Indeed, despite soaring wages and generous bonuses, there has been little change in the size of the labor force in some Southern California counties over the past 12 months. Los Angeles County has a smaller labor force now than it did a year ago, while Orange County’s labor force rose by 1.1% and that of Ventura County by 0.6%. Inland Empire’s labor force remained virtually unchanged over the past year.”
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