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NEWS ANALYSIS : After Verdicts, Hopeful Days Are Here Again : Economy: Business leaders, hurt by last year's riots, are breathing an audible sigh and looking ahead to better days.

April 19, 1993|JAMES FLANIGAN | TIMES STAFF WRITER

A renewed confidence was unmistakable among business people in Los Angeles and Southern California this weekend as they expressed relief that the trial is past and that business can get back to normal.

Few went as far as Police Chief Willie L. Williams and Cardinal Roger Mahoney, who both said Saturday that the verdict in the Rodney G. King civil rights trial could spark a "renaissance" for Los Angeles.

But even relief can mean a lot of money: Real estate brokers and escrow companies may now see millions of dollars worth of home purchases and commercial leases get back on track after being delayed by buyer hesitancy.

Shirley Tweedy, a Century 21 broker in Northridge, said Sunday that "things had slowed down over the past week or so, but today we have two conference rooms with people in them. And they're buying, so they must have faith in the future of the market."

In shops on Melrose Avenue, sales on Sunday ran ahead of Saturday--the reverse of the normal pattern. At Hide Out, a shoe store popular with young shoppers, manager Kamran Younai said business was coming back after a week in which "everybody stayed home because they were expecting a verdict."

Still, in some areas customers were slower to come back. Shopper traffic remained light at Baldwin Hills Crenshaw Plaza. Ollie Moss, manager of Athletic X-Press, a sports apparel store, said business has been slack for weeks and sales this weekend remained 20% below average. "I'm glad the trial is over," Moss said. "Business may begin to pick up sometime soon."

In the city's important tourism industry, the peace that prevailed after the Saturday morning jury verdict impressed World Cup soccer officials, who were visiting Los Angeles over the weekend.

"I think they were comfortable with the reaction in the community," said George D. Kirkland, president of the Los Angeles Convention and Visitors Bureau, who also spoke to two other groups considering Los Angeles as the site of conventions.

To be sure, one verdict and a peaceful weekend will not have much effect on the lingering economic recession that continues to grip Southern California. National and even historic factors, such as downscaling the defense industry, caused that, and most economists don't see the area recovering until early 1994.

But the importance of a psychological lift should not be underestimated.

"Psychology is a factor in a lot of economic activities, a business's investments as much as a family's decision to buy a new washing machine," said Edward Muller, chief financial officer of Whittaker Corp., a Los Angeles-based aerospace company.

"In Los Angeles, psychology is everything. Why do you think those house prices are so high?" said Bernard Kinsey, co-chairman of Rebuild L.A, the private-sector organization that has the herculean task of attracting business investment to the city after last year's riots.

Kinsey, a former corporate executive for Xerox Corp., was making a serious point: The value of any economy rests on expectations of what a region and its people can do.

In that sense, Kinsey estimates that $20 billion in real estate value has been clipped from the five-county area (Los Angeles, Orange, San Bernardino, Riverside and Ventura) just because of the riots--independent of declines due to the overall recession. But now attitudes may change and values turn. At Rebuild L.A., specifically, the announcement of a significant investment in Los Angeles' riot-torn neighborhoods has been held up pending the trial's outcome, Kinsey said. It could be released this week.

It was a weekend for taking stock of assets and liabilities, and the most hopeful development following the verdict was that business people were once again acknowledging the region's assets.

One corporate executive recalled Sunday that less than 10 years ago, during the 1984 Olympics, Time magazine and other national media had called Los Angeles "the city that works." But Time's latest issue, published as the jury was deliberating, asked the rhetorical question "Is the City of Angels Going to Hell?"

The answer is neither heaven nor hell, but a city and a region struggling with profound shifts in its economy. In 1989 the Berlin Wall came down and Southern California has since lost 126,000 defense-related jobs, and the expectations are that 28,000 more will be lost this year. Unemployment exceeds 10%.

Yet aerospace firms see opportunity in the presence of hundreds of highly capable small companies in the area and the availability of highly trained workers. "You can't get the same level of suppliers or skills in other places," a manufacturing executive said Sunday. "I don't care what you say."

Other corporate executives in finance and entertainment echoed that feeling. Given the great flows of trade and investment moving through Southern California from Asia and Latin America, the region has enormous promise as a center of finance, business experts say.

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