Post-COVID, Southern California's Unemployment Will Continue to Struggle
In a webinar hosted by the Los Angeles Business Council, Developer Nadine Watt gave an overview of the unemployment to come in Southern California.
The State of California, more specifically Southern California, will be hard hit by job loss in the downturn caused by the Coronavirus pandemic. Los Angeles Mayor Eric Garcetti has already declared a state of fiscal emergency in response. In a webinar hosted by the Los Angeles Business Council this week, Nadine Watt, CEO of Watt Companies, outlined the expected unemployment to come as well as the subsequent loss in tax revenue.
According to Watt, unemployment in California will hit its peak at 24.5% and lose $41 billion in tax revenue, compared to estimates from four months ago. In comparison, at the peak of The Great Recession, unemployment reached 24.5%. “That is staggering,” said Watt. The unemployment rate will remain high through 2021, estimated to hover around 12%.
Southern California will bear the brunt of the job losses. “In Southern California, the industry impacts are dramatic,” said Watt. “Southern California restaurants will take the hardest hit in 2020 and 2021 with a 53% to 63% drop in taxable sales.” Clothing stores will falls 43% to 57%, auto sales will fall 38% to 48%, and home furnishing sales will see 34% to 43%.
While the short-term outlook on the economy may seem bleak, Watt believes this pandemic will serve as an accelerator of change for commercial real estate and the usage of commercial space. “I think that COVID-19 served as an accelerator of change, certainly for retail and for office,” she said. “We will contemplate a recalibration of how we use space going forward.”
“There are lights are the end of the tunnel,” she said. “Cities like Long Beach are working on creating outdoor space and closing streets to have outdoor restaurants and creating open street initiatives that will facilitate social distancing.” To read further on the approach the city of Long Beach is taking, read about their 'Open Streets Initiative'.
As the state of California continues to lick its wounds during these challenging, unprecedented times, it will only be a matter of time before Californians bounce back stronger than ever.
Now, more than ever, is the time to reach out to your neighbors and help each other during these times. Please visit your local EDD websites for financial assistance, your local city council to volunteer, and your local hospital to get tested and maintain your health for the benefit of yourself and the people closest to you.