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XUCLA Economists 'Tear Up' 2020 Forecast and Revise GDP Down Due to COVID-19
Tami Abdollah was dot.LA's senior technology reporter. She was previously a national security and cybersecurity reporter for The Associated Press in Washington, D.C. She's been a reporter for the AP in Los Angeles, the Los Angeles Times and for L.A.'s NPR affiliate KPCC. Abdollah spent nearly a year in Iraq as a U.S. government contractor. A native Angeleno, she's traveled the world on $5 a day, taught trad climbing safety classes and is an avid mountaineer. Follow her on Twitter.

University of California, Los Angeles economists tore up their quarterly March 2020 economic outlook as COVID-19 anxiety took hold of the American public and the novel virus spread through dozens of states.
The updated 104-page UCLA Anderson Forecast, released early Thursday, revised their earlier forecast of 2% for real GDP growth to a low 1.5% on a fourth-quarter-to-fourth-quarter basis, as they took a "midpoint between coronavirus having a very minimal effect to it causing a full-blown recession."
The economists, who clearly hedged their bets amid calls by some that the coronavirus is a black swan event, anticipated a hit to real GDP in the second and third quarters of the year with modest increases of 1.3% and 0.6%, respectively, rather than the 2%-plus growth earlier anticipated, and noted that "time will tell."
"We tore up the forecast, we did the second one, and if we had to do it again today, we'd redo it again drastically," said David Shulman, senior economist for UCLA Anderson Forecast, in a phone interview with dot.LA on Tuesday evening.
The most recent forecast was based on numbers run at the start of March, which did not include the impacts of a price war between Saudi Arabia and Russia that drove down the price of oil, Shulman said.
Courtesy of the UCLA Anderson March 2020 Economic Forecast
The impact of that battle is likely to trigger a far bigger manufacturing collapse than the forecast anticipated given that the U.S. is the largest oil producer in the world at 13 million barrels a day, Shulman said. The drop in prices will have especially dire consequences for the American southwest and North Dakota regions.
Shulman said the quarters of more modest growth that were anticipated might as well be "minus signs instead of plus signs" because of this change. "That pushes us into a recession or really close to it," he said.
The forecast had already taken an overall pessimistic view of 2020, given China's significantly greater impact on global supply chains and the economy than its impact during the SARS epidemic, which started some 17 years ago. At the time China's GDP share of the world was 4% and now it is 16%, the report states.
"We view the COVID-19 epidemic and likely pandemic to work as both a supply shock and a demand shock on the economy," the report states because both factories are shut down and the demand for travel, hotel and other services has also dropped.
The report estimated the international tourism loss to be around $4.3 billion a month to the U.S. With California accounting for 21% and Los Angeles for 12% of total international tourism revenue in the United States. But because Chinese and other Asian tourists are more likely to head to California and L.A., the economists assumed their market share to be higher -- at 42% and 24% respectively. The anticipated economic impact on California is therefore $1.8 billion a month and on Los Angeles, $1 billion a month.
China has been working hard to reopen factories but the forecast noted that a fraction of production capacity had resumed over concerns of a resurging outbreak, which has slowed the pace of resumption. That means that the U.S. could start to see a "significant supply chain disruption" in mid-March if cargo ships from Asian ports aren't sufficient for the American market and people run out of inventory, the forecast states.
That's especially problematic given how centralized global supply chains of, for example, pharmaceutical products, appear to be. Many Americans are unaware that their prescription drugs are from there, according to testimony cited in the forecast from a hearing of the the U.S.-China Economic and Security Review Commission in July 2019.
Shulman said that actions taken by the Trump Administration and the Federal Reserve are better than nothing, but "monetary policy is neither a cure nor a vaccine for COVID-19."
He wrote in the report: "It cannot reopen factories in China or Italy, and it cannot convince frightened people to travel. But it might reduce fears that something worse could happen to the economy and might alleviate the pain of stressed businesses facing supply-side shortages."
The report did have one bright spot: A revised forecast for housing starts that went up from 1.25 million units a year to 1.35 million units a year. The report chalks that up to rising income and low fixed-rate mortgages. However, the report expects 117,000 net new units to be built in 2020, and states that "the prospect for the private sector building out of the housing affordability problem over the next three years is nil."
"Rising income and the allure of 3.25% 30-year fixed rate mortgages are beginning to overcome the supply constraints caused by local zoning," the report says.
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Tami Abdollah was dot.LA's senior technology reporter. She was previously a national security and cybersecurity reporter for The Associated Press in Washington, D.C. She's been a reporter for the AP in Los Angeles, the Los Angeles Times and for L.A.'s NPR affiliate KPCC. Abdollah spent nearly a year in Iraq as a U.S. government contractor. A native Angeleno, she's traveled the world on $5 a day, taught trad climbing safety classes and is an avid mountaineer. Follow her on Twitter.
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This Week in ‘Raises’: Improvado Hauls $22M, Clearlake Launches $14B Fund
Kristin Snyder is an editorial intern for dot.la. She previously interned with Tiger Oak Media and led the arts section for UCLA's Daily Bruin.
This week in “Raises”: A pair of Web3 platforms for gamers landed funding, as did a Manhattan Beach medical startup looking to bolster primary care via nurse practitioners. Meanwhile, a Santa Monica-based investment firm launched its seventh fund with more than $14 billion in dry powder.
Venture Capital
Improvado, a marketing data aggregation platform, raised $22 million in a Series A funding round led by Updata Partners.
Web3 gaming platform FreshCut raised $15 million in funding led by Galaxy Interactive, Animoca Brands and Republic Crypto.
Medical startup Greater Good Health raised $10 million in a funding round led by LRVHealth.
Joystick, a Web3 platform for gamers and creators, raised $8 million in seed funding.
Open source data protection company CipherMode Labs raised $6.7 million in seed funding led by Innovation Endeavors .
Mobile phone charging network ChargeFUZE raised $5 million in seed funding led by Beverly Pacific, TR Ventures, VA2, Jason Goldberg and Al Weiss.
Polygon, a startup aiming to better diagnose children with learning disabilities, raised $4.2 million in seed and pre-seed funding led by Spark Capital and Pear VC.
Pique, a virtual women's sexual health clinic, raised $4 million in a seed funding round led by Maveron.
Psudo, a sneaker startup that utilizes recycled water bottles and 3D sublimation printing to create its shoes, raised $3 million in a seed funding round led by SternAegis Ventures.
Funds
Santa Monica-based investment firm Clearlake Capital Group raised $14.1 billion for its seventh flagship fund.
Raises is dot.LA’s weekly feature highlighting venture capital funding news across Southern California’s tech and startup ecosystem. Please send fundraising news to Kristin Snyder (kristinsnyder@dot.la).Kristin Snyder is an editorial intern for dot.la. She previously interned with Tiger Oak Media and led the arts section for UCLA's Daily Bruin.
LA Tech ‘Moves’: New Head of Originals at Snap, New President at FaZe Clan
Kristin Snyder is an editorial intern for dot.la. She previously interned with Tiger Oak Media and led the arts section for UCLA's Daily Bruin.
“Moves”, our roundup of job changes in L.A. tech, is presented by Interchange.LA, dot.LA's recruiting and career platform connecting Southern California's most exciting companies with top tech talent. Create a free Interchange.LA profile here—and if you're looking for ways to supercharge your recruiting efforts, find out more about Interchange.LA's white-glove recruiting service by emailing Sharmineh O’Farrill Lewis (sharmineh@dot.la). Please send job changes and personnel moves to moves@dot.la.
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FaZe Clan brought in Zach Katz as the gaming and media company’s new president and chief operating officer. Katz was previously the chief executive officer of the music tech investment fund Raised in Space Enterprises.
TikTok brand factory LINK Agency promoted Dustin Poteet to chief creative officer. Poteet was previously creative director at the firm.
Livestream shopping platform Talkshoplive hired Tradesy co-founder John Hall as its chief technology officer. Universal Music Group Nashville's former vice president of digital marketing, Tony Grotticelli, also joins the company as vice president of marketing.
Anjuli Millan will take over as head of original content at Snap after three years of overseeing production for the division.
Tech and media company Blavity hired Nikki Crump as general manager of agency. Crump joins the company from Burrell Communications Group.
O'Neil Digital Solutions, which provides customer communications and experience management for the health care industry, hired Eric Ramsey as national account sales executive. Ramsey joins from T/O Printing.
Investment firm Cresset Partners named Tammy Funasaki as managing director of business development. Funasaki previously served as head of investor relations for Breakwater Management.
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Kristin Snyder is an editorial intern for dot.la. She previously interned with Tiger Oak Media and led the arts section for UCLA's Daily Bruin.
Snapchat’s New Controls Could Let Parents See Their Kids’ Friend Lists
Christian Hetrick is dot.LA's Entertainment Tech Reporter. He was formerly a business reporter for the Philadelphia Inquirer and reported on New Jersey politics for the Observer and the Press of Atlantic City.
Snapchat is preparing to roll out enhanced parental controls that would allow parents to see who their teenagers are chatting with on the social media app, according to screenshots of the upcoming feature.
Snap’s parental controls.
Courtesy of Watchful.
Snapchat is planning to introduce Family Center, which would allow parents to see who their children are friends with on the app and who they’ve messaged within the last seven days, according to screenshots provided by Watchful, a product intelligence company. Parents would also be able help their kids report abuse or harassment.
The parental controls are still subject to change before finally launching publicly, as the Family Center screenshots—which were first reported by TechCrunch—reflect features that are still under development.
Santa Monica-based Snap and other social media giants have faced mounting criticism for not doing more to protect their younger users—some of whom have been bullied, sold deadly drugs and sexually exploited on their platforms. State attorneys general have urged Snap and Culver City-based TikTok to strengthen their parental controls, with both companies’ apps especially popular among teens.
A Snap spokesperson declined to comment on Friday. Previously, Snap representatives have told dot.LA that the company is developing tools that will provide parents with more insight into how their children are engaging on Snapchat and allow them to report troubling content.
Yet Snap’s approach to parental controls could still give teens some privacy, as parents wouldn’t be able to read the actual content of their kids’ conversations, according to TechCrunch. (The Family Center screenshots seen by dot.LA do not detail whether parents can see those conversations).
In addition, teenage users would first have to accept an invitation from their parents to join the in-app Family Center before those parents can begin monitoring their social media activity, TechCrunch reported.
Christian Hetrick is dot.LA's Entertainment Tech Reporter. He was formerly a business reporter for the Philadelphia Inquirer and reported on New Jersey politics for the Observer and the Press of Atlantic City.