Sunny Forecast for Economy in Southland

Southern California, which was slow to snap out of the severe early-’90s recession, should enjoy faster economic expansion than the rest of the country through at least 2002, according to a new report.

Economists at Cal State Long Beach, in their annual Southern California forecast to be released today, also said that the already vigorous local recovery will speed up this year and next. They predicted that employment growth, the main indicator of local economic performance, will rise from 2.7% last year to 2.9% in 2000 and 3% in 2001 in the five-county region.

That job growth is expected to be fueled partly by the greater supply of available workers in Southern California than in many other parts of the country. The extra labor supply reflects an anticipated pickup in people moving to Southern California, along with unemployment levels here that remain above the national jobless rate of 3.9%, a 30-year low.

By comparison, the latest unemployment figure for Los Angeles County is 5.4%, and for the entire state, 4.9%.

“We’ve got a little more room to grow,” said Lisa M. Grobar, director of the Economic Forecast Project at Cal State Long Beach.

Grobar said the main potential for trouble is if the stock market were to tumble, which would trigger a reduction in consumer spending. She also noted that rising interest rates are somewhat slowing the still-strong job gains in construction and could lead to a worsening housing crunch.

For now, however, the Cal State forecasters are calling for broad-based growth. They forecast substantial increases in jobs in services, retailing and state and local government, along with construction. Even durable-goods manufacturing, which has slumped, is expected to recover because of increased demand from foreign trading partners.

Los Angeles County, which was the heart of the state’s economic downturn in the early ‘90s because of major defense and aerospace cutbacks, continues to bounce back more slowly than the rest of Southern California. Even so, the Cal State Long Beach analysts expect the county to boost its job total by 2.2% this year, 2.5% next year and 2.4% in 2002. One of the main reasons is the stabilization in manufacturing, coupled with growth in a variety of other industries.

By year’s end, the analysts predict, the county’s employment finally will reach 4.2 million, returning to the level where it stood in 1989, before the recession struck. The rest of the region already has overtaken pre-recession employment levels.

Orange County, after growing at a record pace of 5.3% in 1998, slowed to a still-solid 3.5% last year and is predicted to post gains of about 3.3% annually through 2002.

Riverside and San Bernardino counties are expected to continue setting the pace for employment growth in Southern California, even while slowing somewhat from 5.8% last year to 5% this year. In Ventura County, job growth is projected to slow from 4.2% last year to 3.4% this year.

By Cal State Long Beach’s assessment, Southern California’s recovery began in 1994, and the region’s job growth has outpaced the national level since mid-1997. The national economy, however, began its recovery in March 1991, after only a mild recession. At just over nine years, it is the longest expansion in U.S. history.