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Peter Bellas: Now that we’ve been forecasted

Posted: March 6, 2013 2:00 a.m.
Updated: March 6, 2013 2:00 a.m.

Peter Bellas

 

Once again we are upon the season of forecasts. A quick perusal of any investment website will turn up some very rosy and optimistic forecasts for the coming year and a least a few doom and gloom predictions.

Many of these seem designed, most likely, to shock and gain readers. But are there useful forecasts?

Thankfully economic forecasts for the year are well researched and quite useful for planning purposes. Our local economic forecast was targeted for our specific region, north Los Angeles County.

Mixed in with national data, and competitive information from our close neighbors, the forecast provided a clear vision of where we expect the economy to go over the next 12 months. This focus on local regions allows the economic model to reduce random variables and thus be more accurate.

The process of forecasting is quite complex. For California they start by developing moderately detailed models for each of the California counties. These individual models are combined to create an aggregate forecast and then “disassembled” into detailed local forecasts for each region using over 2,000 stochastic equations by which predictable events and random elements are reconciled.

Groups like the California Economic Forecast have spent decades refining their model for the California regions and are well respected for their thoughtful and accurate data.

Our economic forecast had valuable information for almost every business person.

Of key concern is industrial space availability, which currently is quite tight, but data indicates that it is ready to expand. That combined with data about expansion plans for specific local industry clusters, such as aerospace, gives us a good idea of where to put our resources for the coming year.

Retailers were interested in the forecast for consumer confidence, discretionary income and spending patterns. This data will be used to manage inventories, make strategic decisions on product mix and determine the proper timing for product launches.

Realtors were no doubt pleased to see a modest gain in median home prices and a significant drop in default notices.Employment figures and job growth affect almost every aspect of the forecast. We were all delighted to finally see a return to positive job creation numbers in this forecast. Job growth affects confidence and spending, both retail and housing and industry specific job growth is useful data for planning and business attraction.

Our forecast also included comparisons to surrounding areas and a comparison to national trends, along with quantifying risks to the forecast. This analysis is important in determining the level of competition from other communities and in helping to define the competitive advantage we may have in attracting businesses to our community.

College of the Canyons partners each year with the Santa Clarita Valley Economic Development Corporation to sponsor the Economic and Real Estate Outlook conference in February. If you missed this year’s conference make sure to keep in on your radar for the coming year, it is always well worth a few hours of your time to get an up-to-date outlook on the local economy for the coming year!

Pete Bellas is the Dean of Economic Development at College of the Canyons. His column reflects his own views and not necessarily those of The Signal. For more information about the College of the Canyons Economic Development Division, call (661) 362-3521 or visit www.canyonsecondev.org.

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