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Preview | WEEK OF SEPT. 16-22

California Economy Already Recovering

Forecast: The Southland will lead the comeback while the Bay Area struggles, LAEDC says.


California already is recuperating from last year's mild downturn, but the hard-hit San Francisco Bay Area probably will continue to stumble well into 2003 and beyond.

Those are some of the predictions in a forecast expected to be released today by the Los Angeles County Economic Development Corp., which projects that Southern California will continue to be the state's growth engine as it moves out of recession.

In fact, Southern California managed to squeak by the recession altogether, according to the LAEDC's calculations, ending 2001 with employment growth and a razor-thin 0.9% increase in its share of the gross state product. The five-county region is expected to add a modest 22,900 jobs this year, jumping to 133,500 in 2003, when the area's gross product is projected to surge 4.7%.

The outlook isn't so sunny for Northern California, which continues to suffer the fallout from the popped technology bubble. The LAEDC expects three major metropolitan areas--San Francisco, San Jose and Oakland--to lose 80,500 jobs this year and regain only about half of those in 2003.

The tech sector isn't expected to pick up much next year, outside of security and homeland defense applications, while telecommunications may not see glimmers of improvement until at least 2004. Sluggish international travel has pummeled tourism in San Francisco, which also is experiencing a glut of office space.

"It's going to be a pretty dreary year in the Bay Area," said Jack Kyser, chief economist with the LAEDC. "Their recovery is going to be very slow."

Though Southern California evaded the worst of the downturn, it didn't get away unscathed. Slumps in tourism, construction, film production, international trade, aircraft production and manufacturing hobbled Los Angeles County, which posted virtually no growth in its share of the state gross product in 2001. Lingering weakness will result in the loss of nearly 24,000 jobs in the county this year, the forecast said.

The good news is that international trade, mostly imports through the ports of Long Beach and Los Angeles, has rebounded sharply. That sector is expected to give the local economy a lift if current labor talks at the docks don't derail. Defense projects, including production of Northrop Grumman Corp.'s portion of the F-35 Joint Strike Fighter in Palmdale, should boost aerospace jobs slightly in L.A. County next year. Tourism also is expected to post a modest gain in 2003. The LAEDC projects that county employment will grow by more than 60,000 jobs, or 1.5%, next year.

The Inland Empire will continue to lead the Southland in job growth, according to the forecast. San Bernardino and Riverside counties are expected to post 3.5% nonfarm employment growth this year, advancing to 4.1%, or more than 44,000 jobs, next year.

As a whole, California will lose 20,400 jobs this year and its gross product will inch ahead by 0.8% after declining 2.3% last year, according to the LAEDC. The slowdown cost California a notch in its ranking among the world's leading economies, where it currently ranks sixth behind the United States, Japan, Germany, Britain and France.

Preliminary data from the Organization for Economic Cooperation and Development had indicated that California had knocked off France to grab the fifth spot. Revised data now show that France managed to hold its position with $1.310 trillion in gross product in 2001, just ahead of California's $1.309 trillion. But LAEDC economists said that ranking could change once the state's tech sector recovers.

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