Can California’s Economy Survive the Plagues...

Gary Schlossberg

Senior economist for Wells Fargo Bank:

California will recover. But the issue is when and how strong the recovery will be. California’s strong point is foreign trade. It is well-positioned with the Pacific Rim and Latin America, with or without NAFTA. It has a dynamic small-business sector that, hopefully, will be fostered down the road. There are some sectors that are beginning to stir a bit, like housing. But we could see declines in employment for several more years.

Political forecast interviews conducted by Therese Lee. John Ellwood

Professor, UC Berkeley’s Graduate School of Public Policy:

In terms of natural disasters, most victims are insured. The money coming from outside the state is a net plus. (But) California’s problem is its unwillingness to tax itself for infrastructure and schools.

Fred Cannon

Senior economist, Bank of America:

Certainly, California can recover. (Losses as a result of) natural disasters and riots, from a total economic standpoint, are pretty modest. Natural disasters (do) hurt confidence in the state not only as a risky place to live in, but also in whether we can deal with natural disasters. In Oakland, there are still lots nobody is doing anything to. This underscores a loss of confidence and willingness to reinvest here. However, a bigger effect is the loss in wealth from the decline in property values.

Larry Kimbell

Director, UCLA Business Forecasting Project:

I don’t see the disasters as positive, but (they do not represent) as big a loss as the 65,000 aerospace jobs lost in L.A. County. I don’t think the economy will bounce back. I see a slow, painful recovery. People will look for work and not find it, so they will leave (the state) or take jobs that are not very desirable or become so discouraged they stop looking for work.

Martin Anderson

Senior fellow, the Hoover Institution and a member of Gov. Pete Wilson’s Council of Economic Advisers:

If you look at the natural resources, the climate, the industrial base . . . there is no way California is not going to come back, and when it does, it will come back powerfully. There have been some extraordinary events that have affected California, but there is a lot of evidence they are being worked out. Even though taxes are higher than they should be, (California) will be slowly overwhelmed by the good news.

Dennis Macheski

Director of research, Price Waterhouse Real Estate Group:

(Natural disasters and riots) have clearly hurt. But California will recover. Look at the fundamentals. The average education level of the labor force is 30% higher than the rest of the nation. With the more advanced sectors of the economy and professional services, you typically see ratios of 30%, 40% and 50% higher than the rest of the nation in business, legal, engineering, management and computer services, which are highly specialized and well-paying. A lot of the clobbering has been due to the defense downturn and there is not much left to go.

Jack Kyser

Chief economist, Economic Development Corporation of Los Angeles County.

California is definitely going to recover. A lot of it has to do with attitude. (The recent fires) are heartbreaking, but they perhaps represent a defining moment in the history of Southern California: People are tired of talking about negative things and are asking what can we find that is positive out there.

The big question is, what replaces aerospace? We have a conversion project up and running and we are working with firms on some innovative projects. We are getting more requests about Southern California locations from out-of-state businesses; the tourist industry has turned the corner.