B of A Forecasts Slower Growth for L.A. County : Housing, Land Costs Seen Boosting Inland Areas

Buoyed by relatively low housing and land costs, the inland areas of California will continue to grow faster than most coastal regions during 1988, according to a Bank of America report on the state’s regional economies released Wednesday.

Meanwhile, Los Angeles County will grow less rapidly than in previous years. But the county will remain California’s economic powerhouse and neighboring San Bernardino and Riverside counties will experience impressive growth.

“We don’t think Los Angeles is going to stagnate, but its growth rate will continue to be outpaced by other areas,” said Bank of America economic forecaster Frederick L. Cannon, who wrote the economic report.

Cheap Housing Is Driving Force

San Bernardino and Riverside counties, as well as the Sacramento metropolitan area will report the sharpest increase in population and jobs during 1988, according to the report. Sacramento, for example, should see the number of jobs grow by 4.9%--about twice the estimated rate of for Los Angeles.

Sacramento and the Central Valley should benefit from the the resurgence of the hard-hit agricultural and energy industries--major employers in the area. But the driving force behind the growth is the inexpensive housing and land costs, the report said. While the average home price is $165,000 in Ventura County, the average home in the Riverside-San Bernardino area will fetch $99,000.

As a result, many manufacturing and service firms have migrated inland from the more pricey coastal areas, particularly in the San Francisco Bay area. “This is a continuation of a shift inland as we get higher costs in the coastal areas,” Cannon said.

In Line With Report

While the rate of growth heats up inland, Los Angeles County is expected to see the number of jobs grow by only 2.3% in 1988, compared to the average rate of 2.5% during the past five years. Still, even that rate of growth will mean that Los Angeles County--which already claims 50% of the state’s work force--will create an additional 92,000 jobs, according to the report.

That is in line with a Los Angeles Area Chamber of Commerce forecast that the county will pick up 95,000 jobs this year. That’s down significantly from the 146,000 additional jobs created last year, according to Chamber economist Jack Kyser.

The chief culprit for the decline are slowdowns in the international trade industries, and the construction and the defense industries. Kyser estimates 2,000 jobs will be lost because of a cuts in Defense Department programs.

More Jobs in Orange County

But the job losses at military contractors might be offset by gains at commercial aerospace companies, Kyser added.

Robert K. Arnold, chairman of the Palo Alto-based Center for Continuing Study of the California economy, also estimated a slight decline in the growth rate for Los Angeles County. But Arnold added: “This kind of slowdown is almost imperceptible.” Nationwide, job growth will be about 1.5% for the year, he estimated.

Moving south, the Bank of America report estimated Orange County will see the number of jobs grow by 3.5%--or 38,000--this year. However, the county has been hurt by the lack of affordable housing--the average home in the county sold for $178,000 in 1987.

San Diego County was the only coastal region expected to match the growth rates of inland areas. San Diego will add nearly 40,000 jobs--a 4.5% increase--this year, according to the report. “Even though we think San Diego is expensive,” Cannon said, “there is still a lot of (inexpensive) vacant land out there that you don’t have in Los Angeles and Orange counties.”

In Northern California, a rejuvenated electronics industry will mean an additional 23,000 jobs in Santa Clara County--the heart of Silicon Valley.

San Francisco Outlook Gloomy

And although some of the largest employers in Santa Clara are defense contractors, “the high-tech industry is not as dependent on defense (contracts) as is the industry in Southern California,” Cannon said.

The outlook for the city of San Francisco, however, remains gloomy. High land and housing costs and tight restrictions on development have stunted the growth of jobs, which have increased an average of less than 1% a year during the past five years. The rate is not expected to change dramatically this year, Conner said.

Nancy Rivera-Brooks contributed to this report.