GLENDALE : Fed Banker Sees California Lagging in ’94
Southern California’s economy continues to perform poorly and will remain sluggish at least throughout 1994, the head of the Federal Reserve Board’s Western regional bank said Wednesday.
“California is currently in its longest and deepest recession since World War II,” said Robert T. Parry, president of the 12th District Federal Reserve Bank in San Francisco. “Southern California, unfortunately, has felt it the most.”
Among Western states, California has the weakest economy, said Parry, who spoke at a fund-raising luncheon sponsored by the Glendale College Foundation at the Red Lion Hotel in Glendale. Idaho, Nevada and Utah rank the highest in economic growth.
The rest of the nation’s economic picture looks brighter, he said. The U. S. gross national product is expected to show about 2% growth in 1993, while a 3% jump is expected for 1994, he said.
Parry blamed California’s recession on federal cuts in defense spending that hurt Southern California’s aerospace industries, as well as slumping property values, real estate sales and home-building contracts--despite the lowest mortgage rates in 30 years.
But he pointed to the recently approved North American Free Trade Agreement and international trade as signs of hope for the future. He didn’t predict when recovery might begin for California, although some economists have predicted a turnaround in 1995.
The free trade pact among Canada, the United States and Mexico--effective Jan. 1--is “going to be positive and it’s going to expand (California’s) already considerable trade with Mexico,” Parry said.
“The most important element of California’s prosperity for today and for tomorrow is clearly its people,” he said. “California’s workers need to be well-trained. If as a state we could rise to that challenge, then I could say the outlook looks bright indeed.”
Parry is one of the 12 Federal Reserve Bank presidents who, with the seven members of the Federal Reserve Board, sit on the Federal Open Market Committee, which determines monetary policy for the country.
