LANCASTER — The next 18 months will be a “bumpy ride” for the United States economy, but most economists have not forecast a deep recession, Robert Eyler, founder and president of Economic Forensics and Analytics, said Friday at the Antelope Valley Economic Development & Growth Enterprise (AV EDGE) 2023 Spring Business Summit.
If there is a recession, it will be a mild one, he said.
It took six years for the California economy to re-employ the same number of people as before the 2008 Great Recession.
In the Antelope Valley, the labor force has not come back with the same vigor as employment because people left, Eyler said.
“There’s still some room to grow to get back to pre-pandemic norms in terms of the number of people available for work in these two cities and the number of people who are working and living in these two cities,” he said.
The California economy is likely to continue to grow over the next three years. However, with a shrinking population — the state’s total population declined by more than 500,000 over the last two years — the issue is where workers will come from, Eyler said.
“While we might get a kick from higher wages, we’re going to see more and more people retire who are on the older side of the labor force because they’re going to continue to have incentive to do so,” he said.
Another factor to consider is who’s left in the labor force, he added.
“We don’t know how many coders went to Austin, how many construction workers went to Austin, how many retirees went to Austin,” Eyler said. “We know a bunch of people went to Austin. The economic mix of that transition is one of the biggest things that California needs to watch in terms of labor force and our ability to open and sustain industries over time.”
The population of people 18 and younger in the cities of Lancaster and Palmdale dropped slightly over the decade, from 2011 to 2021. Both cities are still relatively high, with 28.4% in Lancaster, down from 30.5% and 29.7% in Palmdale, down from 33.9%. Those figures are higher than that of the state, Kern and Los Angeles counties.
“It means y’all have a lot of families here and you’ve kept those families for the most part and you want to keep that,” Eyler said.
It is important, the economist added, because those young people represent the future home-grown labor force.
“If you start to lose that, then you’re kind of more dependent on not only inbound commuters, but whether or not you get migrating families who come in to try and replenish that,” Eyler said.
Over the last few years the cities also brought in more educated households.
At least 59.2% and 59.9% of households in Lancaster and Palmdale, respectively, pay at least 30% of their income for rent. Statewide that figure is 54.2%.
“Affordable housing is not simply a supply problem, it’s really a contractual obligation problem,” Eyler said. “The best way to generate affordable housing is to have employers partner with you on building those homes for their employees. That they provide that as a non-cash benefit to their employees and that’s part of increasing your housing supply that’s specific to a working household.”
He said that is how jurisdictions can get affordability “in the juiciest way.”
The median household income for both cities has gone up from 2011 to 2021. However, inflation-adjusted dollars has eroded the purchasing power of most households.
“We need to be watchful at how our wages really provide purchasing power,” Eyler said.
Looking toward 2025 and beyond, the Antelope Valley has a strong core of manufacturing and science.
“That’s something you can expand,” he said. “There’s a lot of good things that can happen here, keep pushing on that.”
As to what Eyler called the “dismal science,” more defense concerns nationally should be good for the area.
“You should see inflation fade and as inflation fades, that’s good for consumers,” he said. “Wages are not going to go backward, which is good for our wage earners; it’s not good for our small businesses.”
People can expect more uncertainty with the 2024 presidential elections next year.
Eyler encouraged the cities to build housing for working residents.
“In California, when businesses come in and want to grow, they’re going to think why California and why here vs some other place,” he said. “Landscape’s going to get more competitive but y’all have set yourself up outstanding from what I can see.”
The drought is not over; the water wars are just beginning.
Eyler encouraged officials to watch how economic development shifts toward water-saving businesses or away from those that tend to a lot more water.
“I also think the Antelope Valley is in a pretty good spot in terms of climate change and the science around that,” he said. “We do have an energy race about trying to become more self-sufficient in terms of energy. … You’re well set to add to that niche about you being a place for science and manufacturing along those lines, so look for those opportunities. They’re going to be there.”