Economic challenges, opportunities await LA County in 2025, report says
High cost in living and housing prices will continue to pose a challenge for the Los Angeles region in 2025, though some sectors of the economy are poised to grow, sharply lowering the risk of recession, according to a new economic study released Thursday, Dec. 5.
In 2024, L.A.’s gross county product has a projected growth of 3.3%, which is anticipated to decrease to 2.1% in 2025, shrinking further to 1.3% in 2026, the report showed.
Meanwhile, non-farm employment is estimated to decline by 1.2% in 2024 before recovering with a .6% increase in 2025, and stabilizing in 2026.
The findings of the report were released Thursday by the Southern California Association of Governments as part of its annual “Southern California Economic Update,” prepared by the Los Angeles Economic Development Corp.
“As the largest county economy in the United States, Los Angeles County remains a critical economic hub for California, driven by its dynamic industries, including entertainment, technology, international trade and tourism,” the report stated.
Leisure and hospitality sectors — among the hardest-hit industries due to the coronavirus pandemic — are expected to decline by 4% in 2024 before experiencing some recovery in the following years.
Manufacturing is anticipated for a modest recovery, as well, with job growth of 2.3% in 2025 and 2% in 2026, the report showed.
Transportation and warehousing are expected to experience pressures from automation, regulatory changes and competition with East Coast ports.
The report highlighted several sectors of the economy that show strong potential for growth, such as healthcare, education, professional services and technology-related industries.
While the county of L.A. still struggles with a high cost of living, rising housing prices, and economic inequality, public and private investments are anticipated to stimulate the economy. In particular, advances in renewable energy, technology and infrastructure will play vital roles, according to the report.
Median household income reached $89,007 in 2023, representing an 18.1% increase since 2003. Yet, the progress has failed to keep up with inflation for low- and middle-income households.
The individual poverty rate decreased slightly to 13.7% in 2023, and remains the second highest in the Southern California Association of Governments region, which covers the counties of L.A., Orange, Riverside, San Bernardino, Ventura and Imperial.
“The risk of recession is sharply lower than it was a year ago,” Kome Ajise, SCAG executive director, said in a statement.
“Consumers continue to drive the state and regional economies with their spending, and business investment in equipment and software is sharply higher. This should extend into 2025 as interest rates soften,” he added.