For Some, the Valley’s Faltering Recovery Never Began : Economy: There’s less despair than a year ago, but little enthusiasm. Still, hard-hit area has its share of optimists.
Like the weather, economic data changes daily, making for good, innocuous water-cooler chitchat. So it was with the ease of habit that Northridge Pharmacy owner Barry Pascal settled down in his office to discuss the latest disappointing economic news. Yes, he said, he’s heard that “they” say the recovery has stalled. He offers the stock explanations: the lingering effects of the earthquake. Or just another economic cycle.
But unlike rain, which everyone knows firsthand, Pascal can only talk about the recovery in the abstract. Get down to brass tacks, and you find it never reached his store in the first place. Even before the Northridge earthquake, Pascal’s sales were “flat, and drifting down.” And now? “Still flat and drifting down,” he said.
This scenario may be familiar to a lot of people in the San Fernando Valley. The recession hit here harder, and stayed longer, than elsewhere in the country. By now, everyone here knows the story: The decline of the defense industry, combined with riots, fires and earthquakes, brought about a long, painful slide.
And the recovery has been spotty, boosting some sectors of the economy and neglecting others, said economist Jack Kyser of the Economic Development Corp. of Los Angeles County. The value of single-family homes, for example, sank by about 5% in the first quarter compared to last year, even as manufacturing held its own.
No wonder a lot of the talk about the economy here is equivocal. Granted, there’s less of the despair that prevailed a few years ago, when aerospace companies were laying off thousands, said Jerry Curry, president of the United Chambers of Commerce of the San Fernando Valley. But it’s hard to elicit unqualified enthusiasm about the economy from local business people. And where there’s optimism, one sometimes gets the feeling it’s based more in reflex than on improved circumstances.
Take Pascal. Last December, he expanded his business into the building next door--a former liquor store that was having difficulties. He converted the liquor store into a gift shop for Christmas and kept it going after the holidays passed.
Usually, expansion is a sign of success. But in Pascal’s case, it was an act of defiance. He says the gift shop is probably losing money--he doesn’t know how much because he hasn’t done the math. “And I’m not sure I want to,” he said.
He’s keeping the shop open, he said, because things are going to get better.
“If you want to call that optimism, it’s optimism,” he said. “Is it good business sense? No.”
Encino real-estate agent Seth Phillips voices the same self-willed cheer. True, he said, “the year thus far hasn’t met up to my own personal expectations.” But neither are things as bad as they used to be. Although Phillips’ luxury-home business has taken a dive, the so-called entry-level homes--those in the $150,000-to-$200,000 range--have gotten so cheap that many renters, once unable to even consider home ownership in Los Angeles, now can afford to buy them. That means the entry-level market is picking up. Besides, lots of agents have gone under. “The amount of competition I have to work against has dropped radically,” Phillips said.
If the recovery never quite reached luxury homes before stalling, nor did it touch the other end of the spectrum. At the Los Angeles Family Housing Corp./Valley Shelter, a homeless shelter in North Hollywood, all 250 beds are filled. That’s unusual, according to Executive Director Nat Hutton. Normally at this time of year, the shelter is only three-quarters full. Could be the stalled recovery. Could be the weather, Hutton said.
One reason hard times may be revisiting some folks in the Valley is that a boom in earthquake-related repairs is beginning to taper off. Claudia Ellis, office manager of JB McGalliard & Sons, a North Hollywood masonry firm, said the company has laid off about 75 people in the last few months. At its peak, it had about 100 people working overtime on quake repairs. Now, the company has just 23, most of whom work part-time.
Economist Kyser explains it this way: The area has been experiencing “a situational recovery,” meaning it only happens to you if you’re in the right situation. Valley businesses in the wrong situation might include those in retailing, defense and financial services. But those related to trade, motion pictures, tourism, computers, electronics and manufacturing may be doing well, he said.
Among the well-situated, news of a faltering recovery can be shrugged off.
“I don’t think we need to call out the ambulances yet,” said John Marquis, executive vice president of Transworld Bank in Sherman Oaks, who says demand for commercial loans has only gotten stronger despite grim reports on the recovery’s progress. The same goes for California United Bank of Encino. CEO Stephen Carpenter said the bank’s commercial customers, including many manufacturing and distribution firms, have expanded their credit by an average of 30% so far this year, a sign of rapid growth.
But for those stuck with a recovery that’s petering out--or worse, one that failed to show up--a recovery of the will is still possible.
Real-estate agent Phillips, for example, has called upon a kind of optimism rooted deep in the local psyche--part boosterism and part genuine awe for the landscape. You don’t have to look far to see why Los Angeles will bounce back, Phillips insists. “All you have to do is look out the window, up to that beautiful blue sky.”
* DASHED HOPES: Recent hopeful signs for the state’s economy have faded. A1
