Click Here to See Larger Image
By Robert Salonga
Daily Bruin Staff
The UCLA Anderson Economic Forecast predicted Wednesday that the national economy will emerge from recession at a sluggish pace and has a good chance of tumbling back into a downturn, and the local entertainment industry may have taken a permanent hit.
The Los Angeles economy has fallen victim to “outsourcing” from the city’s dominant film sector. Dubbed one of L.A.’s most important industries, movie production is moving away from the area toward cheaper out-of-state locations including Canada.
Anderson School senior economist Christopher Thornberg said in a presentation that motion pictures have recently become a weakness in the L.A. industrial economy, with a decrease of 17,300 employees from February 2001 to February 2002. Before that, the average annual decrease from 1998 to 2001 was 2,233 employees.
Thornberg said the entertainment slump is largely due to the threat of strikes by the Screen Actors Guild and the Writers Guild of America – which temporarily slowed activity – coupled with technology and cost factors driving movie production out of the area.
BRIDGET O'BRIEN/Daily Bruin Senior Staff As part of the Anderson Forecast on March 27, guest speakers from the entertainment industry (l-r) Mark Ordesky, moderator John Rabe, Brad Pomerance and Cody Cluff discuss the state of the movies in L.A.
He added that the number of film production jobs in L.A. may never fully recover.
Edward Leamer, director of the forecast, said in a statement that the national economy faces a similarly bleak future.
Usually economies are boosted out of recession with help from an increase in consumer spending, Leamer said. But consumer spending remained constant through the recession, leaving forecasters to find no driving power to sustained economic recovery.
The current economic condition will only improve considerably with an increase in business investment, Leamer said, but that it’s not likely to happen in the next few years.
“Business investment in pursuit of technological innovations has long waves that last a decade or more – a peak in 1980 and another in 2000. It is highly unlikely that there will be a sharp recovery of business investment in the next year or two,” Leamer said.
The UCLA forecast is one of the most accurate and widely followed economic barometers in the country. UCLA predicted the 2001 downturn long before other forecasts did.
With reports from Kelly Rayburn, Daily Bruin Senior Staff.