Bank Predicts State Recovery to Start in ’93

California should begin emerging from recession the first part of next year after losing additional jobs during the rest of 1992, First Interstate Bancorp predicted in its latest economic report.

The Los Angeles banking firm, parent of First Interstate Bank of California, added that Los Angeles will be one of the last areas of the state to recover because of its dependence on the sagging aerospace industry and because of the continued soft commercial real-estate market.

But the forecast, headed by chief economist Lynn Reaser, predicts a 0.5% rise in non-farm employment next year and a modest recovery in home sales and construction. In Los Angeles County, however, First Interstate sees a 1% drop next year in non-farm employment, on top of the 2.6% drop expected this year.

The report predicts a further restructuring in aerospace, banking, retail, real estate and government, but it adds that California’s non-aerospace manufacturing will be stronger and international trade will grow.

The report predicts that manufacturing, retail and service firms should improve in late 1992 and early 1994, with home sales and construction recovering because of low interest rates and renewed consumer confidence.