VALLEY ECONOMY TO TOP COUNTY REPORT: HEALTH CARE IS MAIN LOCAL WORRY.

Byline: GREGORY J. WILCOX Staff Writer

The San Fernando Valley's economy, which grew at a robust 2 percent the past two years, will slow slightly through 2008, a report being released today predicts.

However, the local economy is expected to outperform Los Angeles County and the state through 2008, says the report from the San Fernando Valley Economic Research Center at California State University, Northridge.

The study will be released this morning when the Valley Industry and Commerce Association holds its annual Business Forecast Conference at the Sheraton Universal Hotel in Universal City.

While the center offers a generally upbeat outlook for the Valley's economy, it does raise some concerns about the health care sector.

Between 1995 and 2005, the number of hospitals in the Greater San Fernando Valley -- the area from Glendale to Calabasas -- fell from 24 to 18. Last year, Northridge Hospital Medical Center closed its Sherman Way campus, a 209-bed facility.

And the report notes that collectively, hospital operating costs have outstripped profits for the past five years.

``The Valley's health sector merits special attention -- not only because of its place as the area's third-largest employer, but because it directly serves the well-being of Valley residents,'' said CSUN economics professor Daniel Blake, who is also the center's director.

Employment in this sector saw steady growth between 2001 and 2005.

``The hospitals that are still here are trying desperately to increase capacity because they've all had to take the patient load that came out of the closing(s),'' said Bruce Ackerman, president and chief executive officer of the Economic Alliance of the San Fernando Valley.

Blake said the Valley, long considered a bedroom suburb of Los Angeles, is now a fully balanced community with an integrated economic base that employs a work force roughly equal to the number of its employed residents.

And while population growth slowed last year, 16,400 more people called it home at the beginning of this year than at the end of 2004.

Most sectors added jobs, but manufacturing continued to decline, the report noted.

``It seems like if one area slows down a little bit, another area will pick up. The Valley has been a fairly dynamic economy,'' Blake said. ``We're growing jobs faster than the population.''

Valley unemployment insurance claims bottomed out in December 2005 and returned to normal seasonal patterns in 2006. And seasonally adjusted unemployment claims are currently below the lowest level recorded during the Valley's 1995-2000 economic recovery.

Entertainment industry jobs grew by 2.2 percent in 2005 and payrolls increased by 5.4 percent, boosting the average worker's annual earnings to $80,300.

And the sector accounted for more than one out of seven of the Valley's private-sector jobs and $1 out of every $4 of the private-sector payroll last year.

The broadly defined retail/trade sector is the largest employer in the San Fernando Valley, and its growth slowed to less than the area's average for the first time in three years, the report said.

Calabasas has the area's highest per-capita retail sales, followed by San Fernando, with the city of Los Angeles portion of the Valley accounting for the lowest sales.

Jack Kyser, chief economist for the Los Angeles County Economic Development Corp., is not surprised by the Valley's sound economy.

He is concerned about possible strikes in the entertainment sector when contracts come up for renewal over the next few years. And he believes it will weather layoffs announced earlier by the Walt Disney Co. and NBC Universal.

The technology and bio-med sectors are also down.

``You have some strong industries out there ... that are growing and these are high-wage jobs, which is very good news,'' Kyser said.

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Source: Economic Research Center of the San Fernando Valley