Southland May Recover Sooner

Job growth in Southern California will just about evaporate in the next six months, but the regional economy, led by Orange County and the Inland Empire, will emerge from the recession faster and stronger than the nation as a whole, according to a forecast by Cal State Fullerton economists.

Unlike the early 1990s, when Southern California sustained a much deeper and longer recession than the nation, the region is heading into the current downturn with stronger momentum and a more diversified economy.

By Cal State’s projections, employment in Southern California will grow at a rate of just over 1% this year and next, compared with a robust 3% rate of growth in 2000. But, there won’t be an outright decline in jobs this year or next, except in manufacturing.

“The recession will hit us but not as hard as the nation as a whole,” said Anil Puri, who delivered his forecast to an audience of more than 700 at a gathering in Irvine.

Still, with the Sept. 11 terrorist attacks exacerbating a decline already underway, Puri said the slowdown in the regional economy will be significant.

In Southern California, personal incomes and taxable sales, a measure of consumer activity, will increase by about 4% this year and next--half the growth rate of 2000. Home values will advance by 3.4% next year in Orange County and by 2.3% in Los Angeles County--both substantially less than this year.

Puri’s forecast is based on the view of the U.S. in a relatively short recession, with the economy recovering by the second half of next year, boosted by lower interest rates and the anticipated federal economic stimulus package.

Cal State’s report Thursday, which is among the first of several economic forecasts to come, shows that Los Angeles County will be the laggard. Puri noted that until recently, the county had been gaining payroll jobs at the fastest rate since 1988.

But a recent slowdown in movie production, coupled with the problems in the tourism and travel industries, will restrain job growth to less than 1% this year and to just 0.5% next year. The county’s unemployment rate, the highest in Southern California, is expected to climb to an annual average of 6.3% next year, from a projected 5.7% this year.

Riverside and San Bernardino counties will see the biggest percentage drop in job growth. But that’s because it had been adding jobs at a sizzling pace of about 6% in 1999 and 2000. This year, job growth in that region should slow to a still healthy rate of 2.5%, followed by a 2.3% rise next year.

Orange County, despite the downturn in the tourism industry that has hit the Anaheim area particularly hard, is expected to add payroll jobs at a rate of 2.3% this year. That will slow to 1.6% next year, with construction, finance and real estate setting the pace. The unemployment rate is expected to hit 4% in the next few months, but for all of next year it should average 3.3%, up just a bit from 2.9% this year.

Puri attributed Orange County’s relative strength to its diversified economic base and to the momentum it built during the last year. Puri’s relatively upbeat assessment both surprised and cheered his audience Thursday.