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Slowing U.S. Growth Expected to Hit Southland

Economy: But forecasters say 2001 will be 'decent,' aided by region's diversification and continued strong foreign trade.


Regional economists say there's little chance Southern California will escape a national economic slowdown that looms next year. But the region's diversified economy will make it more resilient than a decade ago, when it suffered its worst recession since the Great Depression.

The economic predictions are the first of a series of regional forecasts planned for this week and next.

Higher energy costs, a strong dollar, a sagging stock market and skittish consumers are behind the national economic slowdown, said Jack Kyser, chief economist of the Los Angeles County Economic Development Corp. Those factors, plus higher labor and insurance costs, will put Southern California businesses in a profit squeeze that will be a drag on growth.

Add to that the possibility of a screenwriters and actors strike that could pull as much as $250 million a week out of the region's economy by summer, said Kyser, who will present his findings at the business group's annual conference today.

Chapman University in Orange also will forecast an economic slowdown at its year-end conference Thursday, said Esmael Adibi, director of the economic forecast.

"We think that nationally there will be a significant slowdown from this year, but we don't think there will be a recession," Adibi said.

Nonetheless, the slowing U.S. economy will create a drag on Southern California's economy, Adibi said.

"Southern California will slow, but we still expect it to be a decent year," Adibi said.

He said continued strong trade with Asia, Mexico and Canada will help protect the region's economy.

Northern California, because of its reliance on the high-tech-oriented "new economy," will be more vulnerable to a national slowdown, said Edward Leamer, director of the UCLA/Anderson Business Forecast, which will unveil its predictions at a conference Monday.

Leamer also expects a national slowdown.

"The risk is substantial, but Southern California is well positioned to deal with it this time," Leamer said. "It is the north that will have the problems because of its dependence on the new economy."

Both Kyser and Adibi said Southern California will be able to maintain "decent" growth through a slowdown next year because of its diversified industries, though there could be some bumps.

An entertainment industry strike could cost about 5,000 jobs in Los Angeles County by summer. A slowdown is already starting to affect the industry, which gained about 5,000 jobs this year.

Other Los Angeles industries expected to lose jobs include aerospace, which is down about 15,000 jobs over the last two years. The apparel industry is expected to lose 2,000 jobs as companies move the manufacture of low- and moderate-priced clothes overseas.

But the region's economy is no longer heavily dependent on the aerospace industry, making job losses easier to swallow.

And the region's underlying strength in tourism, trade, biomedical and business-services industries will help keep it on a growth track, Kyser said.


Putting on the Brakes

The Los Angeles Economic Development Corp. predicts a slowing of the Southern California economy in 2001. Here's some of the business group's predictions for growth in Los Angeles County.

Personal income

Taxable retail sales

* Estimates

** Forecasts


Source: LAEDC

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