LAEDC estimates up to $8.9 billion in lost economic output from Palisades, Eaton fires

Los Angeles County could lose $4.6 billion to $8.9 billion in economic output over the next five years from the Palisades and Eaton fires, a Los Angeles County Economic Development Corp. study released Thursday predicts.

Federal, state and local governments are estimated to miss out on up to $1.4 billion in tax revenue from 2025 to 2029, depending on how long it takes to rebuild, the report said.

“Speed matters in the recovery process, particularly from an economic perspective,” former California Gov. Gray Davis said during a Zoom news conference Thursday.

The faster the fire areas are rebuilt, the quicker the economy will recover, Davis and L.A. County Supervisor Kathryn Barger said. Both sit on the board of the Southern California Leadership Council, which commissioned the report.

“This report is clear in communicating that our strongest path forward is expediting the rebuilding of our homes, businesses and communities,” Barger said.

The report analyzed three trajectories of recovery: a quick recovery ending in 2028 and matching an earthquake-model recovery timeline from the Federal Emergency Management Agency; a recovery ending in 2032 that doubles FEMA’s timeline; and one ending in 2034 that triples the timeline.

“Across all scenarios, the initial direct economic loss in the burned areas amounted to $1.26 billion of sales revenue (or 90% of baseline level) and about 8,200 jobs (or 85% of baseline employment)” for 2025, according to the study.

Employment losses in Los Angeles county could reach up to 49,110 job-years (which refers to a person working full time for a year) based on recovery time, the study said, with labor losses ranging from $1.9 billion to $3.7 billion.

Los Angeles County industries that will take the brunt of the economic damage include real estate and rentals, retail trade, and professional and scientific technical services. The real estate and rental sector alone is expected to lose $515.8 million to about $1 billion, the study estimated.

Property damage, which was analyzed by counting 20,218 land parcels within the burn area, could range from $28 billion to $53.8 billion based on how long recovery lasts, the study said.

The nonprofit’s president and chief executive, Stephen Cheung, clarified during Thursday’s online news conference that the value did not include losses to businesses outside the burn area, such as those that suffered utility shutoffs or other setbacks.

In comparison with the new study, a Times analysis found that 13,338 land parcels affected by the fires were valued at $16.7 billion, after adjusting for the level of damage to each structure as determined by the California Department of Forestry and Fire Protection. Tax revenue would decrease by $61 million or more per year, according to the data The Times reviewed.