YOU ARE HERE: LAT HomeCollections

Economic Cross-Currents Spawn Winners and Losers : Jobs: Mixed news on the recovery has dealt blows to many, but it's helped others find new avenues of success.


In a world of sky-high stocks and rock-bottom interest rates, vanishing jobs and abundant anxieties about the future, Andrew Gee views his own layoff as a mixed blessing.

"I'd been toying with the idea of going into acting," said the researcher-turned-acting student, who had grown weary of laboring on "Star Wars" laser technology in a windowless room all day. "When the layoff happened, there was nothing to stop me."

Such twists of fortune are common these days, as an extraordinary array of cross-currents sweeps the economic landscape, enriching many, punishing many others and reshaping people's lives in ways they never planned.

The financial economy of stocks and bonds has boomed, even as corporate America continues to lay people off. Low interest rates have proved a bonanza for homeowners and other borrowers--but a stiff penalty for retirees whose income has shrunk.

Just in recent days, a mixed assortment of economic gauges has left analysts to argue whether the lazy national recovery was picking up steam or sputtering. And in California, the latest news remains grim: The recession will hang on through mid-1994, UCLA analysts say.

Yet even California's malaise has taken an irregular toll, leaving some largely unscathed. The Central Valley farmer who sells walnuts to Western Europe or the Silicon Valley entrepreneur who ships sensors to Indonesia are cushioned from the slump in a way that local merchants never can be.

"One person's loss can be another person's gain," said Frederick L. Cannon, an economist at the Bank of America in San Francisco. "There's a tremendous amount of cross-currents in the economy. For California, especially, they seem unprecedented."

Certainly, those whose livelihoods are tied to conditions inside the Golden State's borders find themselves on more perilous turf than their neighbors whose fortunes are not.

When Peggy Schoeny retired from the U.S. Customs Service and opened up a bakery 10 years ago, she hoped to create a legacy--and livelihood--for her twin daughters. The El Monte business expanded steadily, pulling in more than a quarter of a million dollars in sales.

Then, around 1990, it started to sink, and it has been sinking ever since.

"People no longer feel they can afford to have large birthday parties," declares Schoeny, 66, an energetic woman who considered becoming an aerobics instructor after she retired from the federal government. "One hundred people or more to a first birthday party was common--but no more.

"You can live without cakes," she added. "That's what's hurting us."

Dozens of new bakeries, many launched by immigrant entrepreneurs, have sprouted in her area, meanwhile, making survival even tougher. With revenues now 40% below the 1980s' peak and no rescue in sight, Schoeny has decided to unload the enterprise.

"I thought it would be a lifelong thing for them," said the Silver Lake resident, referring to her adult daughters. "But it just hasn't turned out that way."

While Los Angeles is the epicenter of California's slump, troubles ripple through many parts of the state that also have been shaken by defense cuts, overbuilt real estate, crime and congestion.

In the Bay Area community of San Mateo, Jim McCarthy feels lucky to have steady work as a licensed contractor. Indeed, he got his current home-remodeling job when another contractor went bust.

But McCarthy, 36, says it's a struggle and that his income has stagnated for several years. Financially insecure homeowners now offer less lucrative work--renovating a kitchen, say, instead of building a whole new addition. Costs for insurance and lumber have skyrocketed.

"When I was 18, I thought that by the time I'm 36 I'd own a home, I'd be more financially secure," said McCarthy, a father of two, who sometimes fantasizes about relocating to the Pacific Northwest. "I thought I wouldn't be winging it as much. But almost everyone I know is in the same situation."

Actually, Californians whose incomes are linked to conditions in other parts of the country--or the world--have an insurance policy.

Just ask the 80 employees of Impact Systems, a Silicon Valley maker of high-tech components used by paper producers. California customers account for a mere 1% to 2% of business at the 11-year-old San Jose firm. But overseas business represents almost half.

Recent sales to an Indonesian producer of office products, along with shipments to China, Taiwan, South Korea, have helped the bottom line, even as Western Europe's economy has slowed, said Kenneth P. Ostrow, chief executive and founder of the firm.

"To say we're not feeling the recession, would be stating it too strongly," said Ostrow, who expects revenues to remain in the $16-million range this year, while more efficient production will double his profits.

"But because of business in Asia, we're doing better than we would have been."

Los Angeles Times Articles