Los Angeles: The Unfolding Economic Impact of COVID-19
Los Angeles-Long Beach-Anaheim, California has long been known as a major trade and transportation hub for both cargo and passenger traffic. The Port of Los Angeles is the western hemisphere’s busiest seaport, handling more container cargo than anywhere in the U.S., and Los Angeles International Airport is one of the nation’s busiest airports. The L.A. metro also depends heavily on tourism as a source of jobs and economic vitality.
Both the tourism and Trade, Transportation and Utilities sectors were anticipated to take major hits during the coronavirus pandemic, however. So business leaders in the metro were naturally apprehensive about COVID-19 during the pandemic’s onset. That’s when ThinkWhy Research targeted six deeply affected U.S. MSAs, including Los Angeles, for a survey that collected data from 500 business leaders.
In ThinkWhy’s proprietary survey of L.A. business leaders that was conducted between March 14 and 19, 69.5 percent of the respondents said they would revise their revenue expectations as a result of COVID-19. They believed they would be most negatively impacted by the Reduced Time and Attendance of Employees (50.9 percent), Decreased Consumer Spending/Demand (44.8 percent) and an interrupted supply chain (43.8 percent). Further, manufacturing-focused respondents said reduced product availability was most likely to negatively affect their businesses.
Prior to the onset of COVID-19, the Los Angeles metro was ranked the nation’s 34th healthiest market, according to ThinkWhy’s LaborIQ™ Rankings Index. Trade, Transportation and Utilities dominated its employment market, with 18.0 percent of jobs. Education and Health Services was close behind, with 17.4 percent of total employment. L.A.’s annual production of 57,000 jobs was forecasted to decline to 42,100 jobs in 2020. But that was before the coronavirus hit.
Since that time, Los Angeles County has emerged as a center of the pandemic in California, with more than 4,000 confirmed cases and nearly 80 deaths as of April 3. On March 19, L.A. officials issued a stay-at-home order requiring non-essential businesses to cease operations, at least through April 19.
Across the major metros ThinkWhy surveyed, most business leaders said their organization’s initial response to the pandemic had been positive – and Los Angeles businesses were no exception. In L.A., 85.7 percent of respondents said their company was doing all it could to slow the virus’ spread during its initial phase. And 69.5 percent of the respondents said their company’s communications about COVID-19 had been good.
Business Strategy Adapts to New Economy
"We are establishing standard procedures for staff to work from home,” said a finance VP with a Los Angeles hotel chain. “We are providing the needed software and hardware for remote operations and creating a critical response team with the goal of sustaining operations for at least six months."
Added the vice president of operations at a small finance firm, "Remotely working from home and staying compliant with regulations will be the most pressing and difficult challenges within our business."
A vice president of technology at another small company stated, “In our market, aerospace manufacturing, our business strategy will not change, but our business customers have already cut back dramatically on spending. We are praying that the COVID-19 pandemic allows the airline and space industries to resume regular operations in a relatively short period of time."
Los Angeles business leaders ranked a Reduced Ability to Secure Loans as the biggest negative impact of the pandemic on organizations, potentially putting small businesses at risk. Since the survey, President Trump signed into law a $2 trillion stimulus package that includes $350 billion in loans for small businesses hobbled by COVID-19.
The pandemic was anticipated to have a strong impact on the U.S. economy over the next 12 months, the L.A. business leaders said in the survey, and there were mixed expectations from the group about a quick rebound.
Results of the ThinkWhy Research survey from the other MSAs profiled are listed below:
- San Francisco-Oakland-Berkeley, California
- New York-Newark-Jersey City, New York-New Jersey-Pennsylvania
- Seattle-Tacoma-Bellevue, Washington
- Las Vegas-Henderson-Paradise, Nevada
- Miami-Fort Lauderdale-West Palm Beach, Florida
ThinkWhy continuously monitors and forecasts industries and MSAs to measure the impact on the labor market. Stay current with us. We are here to support organizations and provide insights during the economic downturn as well as the recovery phase.