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Regional Rebound Unlikely, Study Says

An index of economic indicators rises slightly, but not enough to show that a turnaround could occur in 2003.

February 04, 2003|Marla Dickerson | Times Staff Writer

A predictor of the Southland's economic growth released Monday showed few signs of a quick turnaround for the region in 2003.

Cal State Fullerton said that its Southern California index of leading economic indicators increased by 0.2% in the fourth quarter of 2002. That's an improvement over the decline of 0.6% in the third quarter but not enough to convince researchers that a solid rebound is in the offing in the next three to six months.

"There will be very little economic growth in 2003," said Adrian Fleissig, author of the index. "It doesn't seem to be that we're turning the corner."

The Cal State Fullerton index is consistent with other data showing that the U.S. recovery is stagnating. The Commerce Department said last week that the American economy grew at a mere 0.7% pace in the final quarter of 2002. The Bureau of Labor Statistics reported separately that wages and benefits likewise increased by 0.7% over the same period, the slowest rate of growth in three years.

War jitters appear to be taking a toll on both consumers and businesses. The Conference Board's index of consumer confidence dropped to a nine-year low in January. California finished 2002 with its first back-to-back loss of nonfarm payroll jobs since the early 1990s, reflecting employers' reluctance to hire.

"There seems to be a whole lot of uncertainty," Fleissig said. "A lot is going to depend on what happens with the pending war" with Iraq.

Cal State Fullerton's Southern California index projects economic activity for a six-county area consisting of Los Angeles, Orange, San Bernardino, Riverside, Ventura and Imperial counties. It tracks seven national and regional components.

Three of those components -- the Pacific region consumer confidence index, nonfarm employment and Southern California building permits -- fell last quarter. The remaining four variables -- money supply, interest rates, the S&P 500 index and the region's unemployment rate -- all moved in a positive direction.

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