e-EDGE is now available as an RSS feed. [Click here to subscribe to it.]The International Monetary Fund (IMF) lowered its forecast of world economic growth in both 2008 and 2009 as fallout from the U.S. mortgage crisis and the credit crunch continues to reverberate around the world. The IMF estimates that the world economy will grow +3.9% this year, down by -0.2 percentage points from its earlier forecast. In 2009, the world economy is forecasted to grow +3.0%, a decrease of -0.9 percentage points from earlier estimates. The expected growth rate for 2009 is the lowest since 1993 (+2.0%).
The United States GDP growth for 2008 was revised upward by the IMF to +1.6% (an increase of +0.3 percentage points) as a result of stronger than expected contributions from exports and economic stimulus checks. However, growth for 2009 was revised down to +0.1% (a decrease of -0.7 percentage points). The forecasted growth rate for 2009 is the smallest since 1991 (-0.2%).
The Euro area is expected to grow by +1.3% in 2008 (down by -0.4 percentage points from earlier estimates) and by just +0.2% next year (down by -1.0 percentage point from earlier estimates). European banks are suffering from their exposure to U.S. mortgages and tightening credit conditions. Dropping home prices in formerly hot property markets in Ireland, Spain, and the United Kingdom are increasing debt burdens and reducing household consumption.
The IMF forecasts economic growth in Japan of +0.7% this year and +0.5% next year (revisions of -0.8 and -1.0 percentage points respectively). Japan’s economy is slowing as its major export markets (Europe and the United States) suffer a severe drop in economic growth. The IMF still expects China to record an impressive growth rate of +9.7% in 2008. However, Chinese economic growth is forecasted to edge down to 9.3% next year (a decrease of -0.5 percentage points from earlier estimates) as demand for its exports declines in Europe, Japan, and the United States. (Eduardo J. Martinez)
PR: http://www.imf.org/external/pubs/ft/survey/so/2008/RES100808A.htm
California exports increased by 11.2% to $13.7 billion in August compared with a year earlier; however, the Golden State trailed Texas with its increase of 29.5% to $14.8 billion in exports (as measured in terms of U.S. Principal Parties of Interest USPPI). Texas edged out California in the export of manufactured goods ($12.4 billion to $9.7 billion) in August, while California maintained its perennial position as the dominant exporter of non-manufactured goods ($1.6 billion versus $0.8 billion). Texas maintained its lead in August for year-to-date total exports with $107.6 billion in exports (an increase of 26.5% from a year ago) compared to $103.8 billion for California (an increase of 11.8% from a year ago).
Using the BEA’s Origin of Movement (OM) series, Texas again led the nation in August with $18.2 billion in total exports, a year-over-year increase of 20.8%. During that same period, California saw its total exports increase by 12.5% to $12.9 billion. California’s exports of manufactured goods increased by 7.3% year-over-year to $9.1 billion, while manufactured goods exports from Texas jumped by 21.2% to $14.9 billion. California’s non-manufactured exports increased by 35.0% to $1.5 billion while Texas’ non-manufactured exports increased by 29.2% to $1.2 billion. Year-to-date, California total exports have increased by 13.6% to $98.9 billion, and Texas total exports have increased by 22.2% to $133.9 billion from the same period in 2007.
State export data by commodity are not available by USSPI. However, commodity data is available for OM state export figures. Oil products made the largest contribution to year-over-year growth of both California and Texas OM exports in August both in terms of total dollar value and the weight of air and ocean shipments. Other California export items making large contributions to growth by weight were scrap metal and refined petroleum products (e.g., petroleum coke).
The USPPI measure allocates export trade value according to the location of companies having the greatest economic interest in an international transaction, while OM measures trade values at the point where international shipments begin, often at consolidation points near border crossings or other ports of exit. Given its long border with Mexico, Texas is home to numerous international border crossings and warehousing facilities, as well as major rail links between the United States and Mexico. Industry observers believe that many shipments originating in other states (including California) are credited as Texas exports to Mexico under the OM state export series. (Eduardo J. Martinez)
State export (OM):
http://www.census.gov/foreign-trade/Press-Release/current_press_release/exh2s.txt
State export (USSPI): http://www.census.gov/foreign-trade/statistics/state/zip/index.html
At the Los Angeles Customs District, export values rose by +19.5% over the year in August to $10.1 billion, while import values increased by +3.9% to $29.1 billion. Total two-way trade value for the month rose by +7.5% to $39.2 billion. The eight-month total for the Los Angeles District was up by +6.4% over the comparable 2007 period to $291.9 billion.
At the San Francisco Customs District in August, export values increased by +2.3% to $3.7 billion, while import values rose by a modest +1.0% to $6.4 billion over the year. The two-way trade value for August moved up by +1.5% to $10.0 billion. The eight-month total for the San Francisco District was up by +7.8% over the year to $80.5 billion.
At the San Diego Customs District, May export values dropped by -2.3% to $3.7 billion, while imports decreased by -10.2% to $3.1 billion. Total two-way trade value for the month decreased by -8.1% to $4.5 billion. The five-month value was up over the year by +4.0% to $36.0 billion. (Eduardo J. Martinez)
The State Controller just released the latest financial results for the General Fund during the 2008-2009 fiscal year (FY), which began on July 1st, 2008. In brief, total receipts have decreased by -3.4% to $21.8 billion, while total disbursements dropped by -15.9% to $27.5 billion. Thus, the General Fund ran a deficit of -$5.7 billion over just the past three months, compared to a deficit of -$5.1 billion registered during the entire previous fiscal year 2007-2008. Not a very good beginning!
Some details from the Controller’s report: (1) Revenue from the big three tax sources—corporation, income and sales & use taxes—fell by -$0.8 billion (-4.0%) compared with July-September 2007. (2) Retail sales and use tax revenues came in -4.0% below last year. (3) Corporation tax revenues fell sharply—by -18.9% over the previous fiscal year. (4) Even personal income tax revenues were down over the year, by -0.4%. (5) On the spending side, Local K-12 Education received $9.5 billion, a decline of -$1.5 billion (-13.6%) over the previous year. (5) Payments to Community Colleges and CALSTRS, the teachers’ pension fund also declined by -$1.1 billion each. (6) Spending for State Operations was down by -$0.4 billion, or -5.2%. This occurred despite higher spending for the Department of Corrections (+$319 million or +15%), Resources (+$143 million for a whopping increase of +39%), and Health & Human Services (+$132 million or +21%). General Government recorded the largest decline (falling by -$760 million or -27%), while debt service fell by -$52 million (-6%) and Legislative/Judicial/Executive spending dropped by -$51 million (-10%).
The General Fund began the 2008-2009 fiscal year with a cash deficit of -$1.45 billion. By the end of September, the deficit had swelled to -$7.16 billion. So far, the deficits have been covered by temporary internal borrowing from various special funds. The state says it still has $7.6 billion of “Unused Borrowable Resources.” A good thing, because the state can’t borrow externally (by selling bonds) because of the credit crunch. What a mess! (Nancy D. Sidhu)
PR: http://www.sco.ca.gov/ard/cash/0809/sep.pdf
Grubb & Ellis Research Services recently released the office market vacancy rates for third quarter 2008. The numbers were up across the board as the economy continued to deteriorate and employment fell. Companies also were putting sublease space back on the market as they delayed hiring and expansion plans until the economic situation gets better.
Mounting job losses in several office-space-using activities – particularly finance and mortgage-related companies – have boosted office vacancy rates around Southern California. The office vacancy rate in Los Angeles County during the third quarter of 2008 was 11.4%, up slightly from second quarter 2008 vacancy rate of 10.8% and considerably higher than the comparable period a year ago of 9.2%. L.A. County’s office vacancy rate has been rising for the past four quarters. Within L.A. County, the San Fernando Valley had the highest vacancy rate at 14.0%, up sharply from third quarter 2007 of 7.8%. The Westside office vacancy rate also increased to 9.5%. The area still has the highest asking rent at more than $3.50/sq.ft. Most of the available spaces were for sublease.
Orange County’s third quarter office vacancy rate increased to 16.1% from 15.2% the previous quarter and from 11.5% the same period a year ago. The Riverside-San Bernardino area’s third quarter office vacancy rate shot up to 19.9% from 17.5% the previous quarter and from 10.7% the same period in 2007. San Diego County’s office vacancy rate increased to 15.0%, up from 14.1% the previous quarter and from 11.0% in third quarter 2007. (Candice Flor Hynek)
PR: http://grubb-ellis.com/Research/Reports.aspx
Thursday, October 2: British American Business Council Los Angeles: Breakfast with Sir Nigel Sheinwald, KCMG, British Ambassador to the United States
Sir Nigel Sheinwald, KCMG took up his appointment as British Ambassador to the United States in October 2007. For the previous four years he served as Foreign Policy and Defence Adviser to the Prime Minister and Head of the Cabinet Office Defence and Overseas Secretariat. He joined the Diplomatic Service in 1976 and has served in Brussels (including as UK Ambassador and Permanent Representative to the European Union in Brussels from 2000-2003), Washington, Moscow, Japan, Zimbabwe and in a wide range of policy jobs in London.
October 20-24: Los Angeles County Technology Week
L.A. Tech Week events are designed to inform those with an interest in technology - businesses that develop technologies and businesses that employ technologies, developers, entrepreneurs, investors, venture capitalists, teachers and students - about the state of the technology landscape in Los Angeles County.
Wednesday, October 22: WTCA L.A. - Long Beach and Asia Society of Southern California presents: "China: After the Olympics"
An in-depth look at China's current economic and political environment and its opportunities ahead with Stephen Joske, Director of Country Analysis, China Forecasting Service, Economist Intelligence Unit; and Donald H. Straszheim, Vice Chairman, Roth Capital Partners, LLC.
Tuesday, October 28: Milken Institute State of the State Conference
The Milken Institute’s 10th Annual State of the State Conference brings together California’s leading lawmakers, senior business executives, investors, academic experts, journalists and other decision-makers for an extraordinary day of discussion, debate and analysis about the state’s future. The conference will be held at Beverly Hilton Hotel, Beverly Hills, CA.
Tickets Now Available! Monday, November 17: The LAEDC 13th Annual Eddy Awards®
The Eddy Awards® is a cocktail, dinner, and awards gala to support fulfillment of the LAEDC mission to attract, retain, and grow businesses and jobs for the regions of Los Angeles County. The Awards were introduced by the LAEDC in 1996 to celebrate individuals, organizations, and now cities that demonstrate exceptional contributions to positive economic development in the region. Honorees: The Walt Disney Company, and Rick Caruso, developer of The Grove and the Americana.
The Economic Data Global Express (e-EDGE) is a free service of the Los Angeles County Economic Development Corporation (LAEDC). Permission to quote any proprietary part of this release is granted given proper credit. Distribution is allowed provided that no modifications are made to the original content. Sponsors of this service do not necessarily endorse all opinions stated herein. For more information, please e-mail to research@laedc.org. To contact LAEDC, please call 213-622-4300.
Subscribe to e-EDGE and receive current economic news and major developments. Your e-mail address will not be disclosed to any outside party (including e-EDGE sponsors) under any circumstances.
To send us comments regarding e-EDGE, please e-mail to research@laedc.org.