This year marks the 10th anniversary of the start of the last recession. According to the National Bureau of Economic Research (NBER), the recession officially began in June 2007.
Let that sink in for a moment. A decade ago, our economy was headed full-bore toward an economic meltdown that would eventually be called the “Great Recession” because of its severity; the economy lost approximately 8.7 million jobs, while the gross domestic product (GDP) contracted by a whopping 5.1%. Southern California was especially hard-hit by the sub-prime crisis and following recession.
The good news is that the region has recovered from the downturn, and then some. Yet, in looking back on some of the job figures from January 2007, and comparing them to the most recent statistics released by the Bureau of Labor Statistics (BLS), little seemed wrong with the SoCal job market. Companies were still adding jobs to the economy.
SoCal, By the Numbers
Just for fun, let’s take a look at the unemployment numbers from a decade ago, and compare then to the BLS’ most recent numbers:
|Los Angeles-Long Beach-Anaheim Metropolitan Statistical Area (MSA)1||4.8%||11.0%||4.8%|
|Anaheim-Santa Ana-Irvine Metropolitan District (MD)2||3.7%||8.4%||3.9%|
|Los Angeles-Long Beach-Glendale Metropolitan District (MD)||5.2%||11.9%||5.1%|
|Oxnard-Thousand Oaks-Ventura Metropolitan Statistical Area (MSA)||4.8%||10.0%||5.1%|
|Riverside-San Bernardino-Ontario Metropolitan Statistical Area (MSA)3||5.4%||12.2%||5.6%|
1 Los Angeles and Orange Counties
2 Orange County
3 Inland Empire
For comparison, we added January 2012 numbers – this was near the end of the so-called “jobless recovery.” And while it’s good news that the double-digit unemployment rate isn’t around anymore, it is interesting to note that, the unemployment rate in January 2017 was slightly higher than the decade before.
But, the unemployment rate tells only part of the story. The number of jobs added to the economy (job gains), along with the job growth percentage, provide a good snapshot into what is happening in a particular economy.
The job growth rate in the Los Angeles MSA (which includes Orange and Los Angeles Counties), increased slightly on an annualized basis, compared to January 2007. But the actual number of jobs added in January 2017 was much higher than what came online in January 2017.
|Los Angeles-Long Beach-Anaheim||Job Growth||Job Gains (Annualized)|
But the MSA is a huge area, encompassing two counties. Furthermore, just studying the Los Angeles-Long Beach-Anaheim MSA doesn’t really give us the entire Southern California Story.
So, here are additional data for Southern California metros:
|Metro||January 2007||January 2012||January 2017|
|Jobs Added (Annualized)||17,700||18,000||16,800|
|Job Growth Rate||1.2%||1.3%||1.1%|
|Los Angeles-Long Beach-Glendale|
|Jobs Added (Annualized)||47,890||39,000||62,600|
|Job Growth Rate||1.2%||1.0%||1.4%|
|Jobs Added (Annualized)||1,600||3,599||7,800|
|Job Growth Rate||0.6%||1.3%||2.6%|
|Jobs Added (Annualized)||16,500||20,500||44,000|
The above tells us the following:
- In early 2007, the Southern California job market still hadn’t caught up with the economic slowdown. Sure, there were foreclosures, but the bankruptcies, the defaults and the job losses wouldn’t begin to be felt until later in the year.
- The Inland Empire seems to be the star of the current economic cycle, with job gains more than doubling from the same period in 2007.
- While Los Angeles County added more jobs than 10 years ago, Orange County did not. There could be many reasons for this, though Chapman University recently issued a report suggesting that Orange County was shedding the high-technology jobs that once boosted the earning income of its residents.
These metrics don’t take us through the explosive growth of the Southern California economy between 2013-2014. That will be saved for another article. But they do provide an interesting snapshot as to where the region was, on the doorstep of the economic meltdown.