2024 Economic Forecast: A Soft Landing for the San Gabriel Valley?
An aging population and a return to restaurants and travel-related activities will see the healthcare and leisure and hospitality sectors lead San Gabriel Valley’s economic growth in 2024. And while the region’s annual average incomes rose by a combined $1 billion and the number of businesses swelled to nearly 91,000 last year, employment has yet to reach pre-pandemic levels.
“All regions of SoCal are facing the challenge of little or no labor force growth,” said economist Robert Kleinhenz, founder of Kleinhenz Economics. “This is due to demographics, but also because the high cost of living is both a deterrent to in-migration and a catalyst for outmigration.”
A full picture of the region’s economic outlook will be presented at the 2024 San Gabriel Economic Forecast Summit on Wednesday, March 27, at the Cooper Auditorium at City of Hope in Duarte. The report is provided by the San Gabriel Valley Economic Partnership and the College of Business Administration at Cal Poly Pomona. It will be followed by two panels: “The Future of Cities,” moderated by Finance, Real Estate and Law Associate Professor Anthony Orlando; and “A.I. For Human Good,” moderated by Sandeep Krishnamurthy, Singelyn Family Dean of the College of Business Administration and Singelyn Graduate School of Business.
“This partnership has been an important opportunity for Cal Poly Pomona to connect with other business and government leaders in the region, and for faculty and alumni from the College of Business Administration, in particular, to share their expertise on important areas impacting business and the economy today,” said Krishnamurthy.
The region’s economic outlook will be described in the context of California- and U.S.- forecasted economic performances and moderate rate cuts expected to be implemented by the Federal Reserve later this year. Key insights include:
- Jobs creation: San Gabriel Valley unemployment remains low at 4.6%, compared to 5% for Los Angeles County and 5.1% for California. It is expected to hover near 4.5% due to limited increases in the workforce, reminiscent of the region’s slow recovery from the Great Recession. After losing 60,000 jobs at the outset of the pandemic, the region recovered more than 45,000 by 2022 with an increase of 2.1% in 2021 and 4.6% in 2022. Job growth was much more muted last year, adding just 1,900 positions for an increase of 0.3%.
- Drivers of growth: Healthcare, which accounts for one-fifth of the region’s job base, saw robust gains in 2023, adding 3,150 jobs (2.3% increase). Leisure and hospitality enjoyed significant recovery, adding 3,450 jobs (4.4% increase). Professional and business services added 1,590 jobs.
- Wholesale trade was hit hardest by job losses, shrinking by 2,010 positions, followed by financial activities (1,640 losses), manufacturing (1,240 losses) and construction (1,160 losses).
- The 2023 payroll grew to a combined $22.1 billion in the first half of 2023. This growth translates to a 2.2% increase in the region’s annual wages from $62,500 to $63,900.
- Business is good, as the number of businesses reached 90,970 in the second quarter of 2023 — a 2.6% year-to-year gain signaling continued growth in the region’s economy.
- Real estate: The housing market faces resistance in 2024 due to elevated interest rates and limited supply. New home building permits were also weaker in 2023, as total permits fell 17% over the year from 3,247 to 2,674. The office sector continues to define a “new normal” as employers and employees balance remote and in-person work. At 10%, the region’s office vacancy rate was half that of county’s last year. The industrial sector remains tight, with an overall vacancy rate of 1.5%.
Home to 1.8 million across 31 cities, the San Gabriel Valley — bounded by Pomona, Claremont and Diamond Bar in the east and La Cañada Flintridge, Pasadena and Monterey Park in the west — is powered by the healthcare, education, manufacturing, tourism and technology industries. The region is a magnet for international trade from the Pacific Rim, foreign investments and expanding Asian entrepreneurship and working capital.