Economic Outlook 21 st Annual Southern California Visitor Industry Outlook Conference Jack Kyser Sr. VP & Founding Economist, The Kyser Center for Economic.

Economic Outlook

21st Annual Southern California Visitor Industry Outlook Conference

Jack Kyser Sr. VP & Founding Economist,

The Kyser Center for Economic Research, LAEDC

Friday October 30, 2009

“They say the recession is over…”

JOBLESS RATES HIGH AND RISING

0

2

4

6

8

10

12

14

1/1

/19

901

/1/1

991

1/1

/19

921

/1/1

993

1/1

/19

941

/1/1

995

1/1

/19

961

/1/1

997

1/1

/19

981

/1/1

999

1/1

/20

001

/1/2

001

1/1

/20

021

/1/2

003

1/1

/20

041

/1/2

005

1/1

/20

061

/1/2

007

1/1

/20

081

/1/2

009

0

2

4

6

8

10

12

14

U.S. 9.8%

California 12.2%

LA County 12.7%

September

Sources: BLS, CA EDD

Percent Unemployed (SA)

JOB COUNTS HAVE BEEN DROPPING

-6

-4

-2

0

2

4

6

Year: Quarter

Rest of US -4.2California -5.0LA County -4.1

Year/Year % Change

Sources: Bureau of Labor Statistics, CA EDD

Q3 2009

Are there “green shoots?”

310

320

330

340

350

360

370

380

390

Jan-06 Jul-06 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09

U.S. RETAIL SALES

Billions of $ (SA)

Source: U.S. Census Bureau

0

400

800

1,200

1,600

2,000

2,400

Jan-97 Jan-99 Jan-01 Jan-03 Jan-05 Jan-07 Jan-09Month-Year

U.S. HOUSING STARTS

Single Family

Total Starts

Latest MonthPlotted: Sep 2009

000s of Units (SAAR)

0

2

4

6

8

10

12

14

16

18

0

2

4

6

8

10

12

14

16

18

Jan-06 Jul-06 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09

U.S. LIGHT VEHICLE SALES

Millions of Vehicles (SAAR)

Cars

Light Trucks

Spot Energy Prices

0

2

4

6

8

10

12

14

Jan

-99

Jul-

99

Jan

-00

Jul-

00

Jan

-01

Jul-

01

Jan

-02

Jul-

02

Jan

-03

Jul-

03

Jan

-04

Jul-

04

Jan

-05

Jul-

05

Jan

-06

Jul-

06

Jan

-07

Jul-

07

Jan

-08

Jul-

08

Jan

-09

Jul-

09

0

20

40

60

80

100

120

140

160West TX Intermediate -->

<-- Natural Gas (Henry Hub)

$/Mcf $/Barrel

Sources: EIA, Natural Gas Weekly

Latest Month Plotted: September 2009

Source: U.S. Department of Commerce, Bureau of Economic Analysis (BEA)

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

U.S Savings Rate

-80.6

-75.4

39.7

-77.0

28.4

-135.3

-150 -100 -50 0 50

Q2 2009

% Change Year-over-Year, with Q2 2009 Q-t-Q

Financial Nonfinancial

Corporate Profits With Inventory and Capital Consumption Adjustments

Source: Bureau of Economic Analysis (BEA), U.S. Department of Commerce

2007

2008

U.S. ECONOMIC GROWTH

-8

-6

-4

-2

0

2

4

6

8

00:1 01:3 03:1 04:3 06:1 07:3 09:1 10:3

ForecastQ/Q Change (Annual Rate)

Sources: Bureau of Economic Analysis, forecast by LAEDC

You are

here!

U.S. LABOR MARKET

Sources: Bureau of Labor Statistics, forecasts by LAEDC

-5.0

-4.0

-3.0

-2.0

-1.0

0.0

1.0

2.0

3.0

4.0

5.0

'96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09f '10f

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

9.0

10.0

11.0

Change in Nonfarm Employment

Unemployment Rate

Forecast

Mil

lio

ns

of

Job

s

Un

emp

loym

ent

Rat

e (%

)

California Fundamentals

0%

2%

4%

6%

8%

10%

12%

14%

99-0

199

-07

00-0

100

-07

01-0

101

-07

02-0

102

-07

03-0

103

-07

04-0

104

-07

05-0

105

-07

06-0

106

-07

07-0

107

-07

08-0

108

-07

09-0

109

-07

-1000

-800

-600

-400

-200

0

200

400

600

800

Nonfarm Jobs: -723,300

Unemployment Rate: 12.0%

Un

emp

loym

ent

Rat

e

Ch

ang

e in

No

nfa

rm J

ob

s Y

ear/

Yea

r (0

00s)

Source: California Employment Development Dept. (EDD)

September 2009

NSA

Los Angeles County Fundamentals

0%

2%

4%

6%

8%

10%

12%

14%

90-0

191

-01

92-0

193

-01

94-0

195

-01

96-0

197

-01

98-0

199

-01

00-0

101

-01

02-0

103

-01

04-0

105

-01

06-0

107

-01

08-0

109

-01

-200

-100

0

100

200

Change in Nonfarm Jobs: -164,200

Unemployment Rate: 12.7%

Un

emp

loym

ent

Rat

e

Ch

ang

e in

No

nfa

rm J

ob

s Y

ear/

Yea

r (0

00s)

Source: California Employment Development Dept. (EDD)

September 2009

NSA

San Francisco Fundamentals

0%

2%

4%

6%

8%

10%

12%

01-0

1

01-0

7

02-0

1

02-0

7

03-0

1

03-0

7

04-0

1

04-0

7

05-0

1

05-0

7

06-0

1

06-0

7

07-0

1

07-0

7

08-0

1

08-0

7

09-0

1

09-0

7

-120

-100

-80

-60

-40

-20

0

20

40

60

Change in Nonfarm Jobs: -47,200

Unemployment Rate: 9.2%

Un

emp

loym

ent

Rat

e

Ch

ang

e in

No

nfa

rm J

ob

s Y

ear/

Yea

r (0

00s)

Source: California Employment Development Dept. (EDD)

September 2009

NSA

San Diego Fundamentals

0%

2%

4%

6%

8%

10%

12%

01-0

1

01-0

7

02-0

1

02-0

7

03-0

1

03-0

7

04-0

1

04-0

7

05-0

1

05-0

7

06-0

1

06-0

7

07-0

1

07-0

7

08-0

1

08-0

7

09-0

1

09-0

7

-70

-60

-50

-40

-30

-20

-10

0

10

20

30

40

Change in Nonfarm Jobs: -52,000

Unemployment Rate: 10.2%

Un

emp

loym

ent

Rat

e

Ch

ang

e in

No

nfa

rm J

ob

s Y

ear/

Yea

r (0

00s)

Source: California Employment Development Dept. (EDD)

September 2009

NSA

Phoenix Fundamentals

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

10%

02-0

1

02-0

7

03-0

1

03-0

7

04-0

1

04-0

7

05-0

1

05-0

7

06-0

1

06-0

7

07-0

1

07-0

7

08-0

1

08-0

7

09-0

1

09-0

7

-200

-150

-100

-50

0

50

100

150

Change in Nonfarm Jobs: -148,500

Unemployment Rate: 8.6%

Un

emp

loym

ent

Rat

e

Ch

ang

e in

No

nfa

rm J

ob

s Y

ear/

Yea

r (0

00s)

Source: Arizona Workforce, U.S. Bureau of Labor Statistics (BLS)

September 2009

NSA

Chicago Fundamentals

0%

2%

4%

6%

8%

10%

12%

02-0

1

02-0

7

03-0

1

03-0

7

04-0

1

04-0

7

05-0

1

05-0

7

06-0

1

06-0

7

07-0

1

07-0

7

08-0

1

08-0

7

09-0

1

09-0

7

-250

-200

-150

-100

-50

0

50

100

Change in Nonfarm Jobs: -188,200

Unemployment Rate: 10.1%

Un

emp

loym

ent

Rat

e

Ch

ang

e in

No

nfa

rm J

ob

s Y

ear/

Yea

r (0

00s)

Source: Illinois Department of Employment Security (IDES), BLS

September 2009

NSA

Mexico GDP Growth% Change in Real GDP, Year-Over-Year

Source: IMF, World Economic Outlook, October 2009

-0.2

0.81.7

3.2

5.1

1.3

-7.3

3.3

6.6

3.34

-9.0

-7.0

-5.0

-3.0

-1.0

1.0

3.0

5.0

7.0

9.0

'00 '01 '02 '03 '04 '05 '06 '07 '08 '09f '10f

Canada GDP Growth% Change in Real GDP, Year-Over-Year

Source: IMF, World Economic Outlook, October 2009

1.8

2.9

1.9

2.9 3.1

0.5

-2.5

2.1

5.2

2.73.1

-4.0

-3.0

-2.0

-1.0

0.0

1.0

2.0

3.0

4.0

5.0

6.0

'00 '01 '02 '03 '04 '05 '06 '07 '08 '09f '10f

U.K. GDP Growth% Change in Real GDP, Year-Over-Year

Source: IMF, World Economic Outlook, October 2009

2.4 2.1 1.92.7

0.7

-4.4

0.9

2.7

4.8

2.63.3

-6.0

-4.0

-2.0

0.0

2.0

4.0

6.0

'00 '01 '02 '03 '04 '05 '06 '07 '08 '09f '10f

Japan GDP Growth% Change in Real GDP, Year-Over-Year

Source: IMF, World Economic Outlook, October 2009

2.9

0.2 0.3

1.41.9 2.0

-0.7

1.72.3

2.7

-5.4-6.0

-5.0

-4.0

-3.0

-2.0

-1.0

0.0

1.0

2.0

3.0

4.0

'00 '01 '02 '03 '04 '05 '06 '07 '08 '09f '10f

Value of U.S. Dollar Since 2000

60

70

80

90

100

110

120

2000 2001 2002 2003 2004 2005 2006 2007 2008 1Q09 2Q09 3Q09

60

70

80

90

100

110

120

Japanese Yen

EuroInd

ex

(20

00 =

10

0)

Source: Federal Reserve Board

Wrap Up

A slow jobless recovery

Consumers & business still hesitant to spend

Health of the airlines still shaky

Lots of debate over the economy – 2010 is an election year

Times are tough, but pay attention to the customer experience

THANK YOU and STAY INFORMED

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