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Executive Summary: LAEDC Economic Recovery Report

Executive Summary: LAEDC Economic Recovery Report

Volunteers from Target and UCLA prepare food kits in the LA Regional Food Bank warehouse in South LA.The COVID-19 pandemic stopped life in its tracks in March of last year. Economic activity crashed, closures and quarantines blocked the supply chain. According to the Los Angeles County Economic Development Corporation (LAEDC), consumer expenditure fell dramatically when businesses were forced to shut their doors to limit infection.

LAEDC reports that low-income workers are dealing with job loss at disproportionately high rates, small businesses are closing at increased levels due to lower revenues, and non-essential service industries that rely on person-to-person interaction are struggling. They say that of those who are leaving the workforce, women were more likely to exit than men. 58 percent of the 4.3 million people who left the labor force in the last year were women.

The amount of economic destruction caused by shutdowns was unimaginable. According to LAEDC, Los Angeles County lost 716,000 jobs during March and April, and the unemployment rate peaked at 21.1 percent in May, far higher than anything seen in the 2008 recession or ever before.

 

Unemployment Rate in LA County, U3 seasonally adjusted
Source: Los Angeles County Economic Development Corporation Institute for Applied Economics 2021 Economic Forecast: A Tale of Two Recoveries

The pandemic has disproportionately hurt low-wage workers. LAEDC says that at its peak in April 2020, high-wage workers throughout the country experienced a 12.9 % decline in employment compared to January of that year. Low-wage employment had dropped by 38.2 percent.

Many small businesses have had to deal with terrible effects – restaurants, bars, hair salons, nail salons, laundry services, and more – have been hurt because of how much they rely on physical interaction and can’t be replicated virtually. Mayor Garcetti enacted a rent moratorium that helped countless businesses and families.

There is light at the end of the tunnel, however. LAEDC believes that the mass vaccination effort against the virus is a probable solution to the health crisis. Dealing with the long-lasting economic effects will be more difficult they say since the past year has changed so much about our way of life. They say that “Achieving herd immunity through vaccination would likely ameliorate the employment contraction.”

All this being considered, LAEDC projects growth in real domestic product of 3.0% for the United States as a whole, 3.0% for Southern California, and 2.8% for Los Angeles County. They also predict a total employment growth of 1,519,500 jobs for the U.S., and 206,600 for L.A. County.

Read the original report here >

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