AREA JOB OUTLOOK IS GOOD ECONOMIC FORECASTS PREDICT STEADY SOUTHLAND RECOVERY.

Byline: John W. Cox Staff Writer

Southern California should be able to create more jobs than it loses this year despite a continuing economic slowdown that has claimed more than 38,000 manufacturing positions in the past 12 months, according to a forecast being released today by California State University, Long Beach.

Saying the recent recession hit bottom late last year, the report calls for 0.8 percent employment growth for the five-county region this year, improving to 1.8 percent by 2003.

Although the university's economists point to a significant slowdown from 2000, when employment grew by 2.9 percent, they emphasize that things aren't nearly as bad as they were in the early 1990s, when the region lost jobs overall for three consecutive years.

``We're going to look back on (the recent slowdown) as a cycle that was very, very mild compared to the early '90s,'' CSULB economist Lisa Grobar said.

Other economic forecasts have anticipated a recovery for California this year as well, with growth projected in key areas of the state's economy - personal income and jobs.

After three quarters of decline, personal income is expected to increase 0.6 percent in 2002 and 5.7 percent in 2003, while nonfarm employment should gain 0.7 percent this year and 2.2 percent next year, according to the University of California, Los Angeles, Anderson School forecast.

The Los Angeles County Economic Development Corp.'s 2002-03 report card predicted an improvement in the five-county region's economy, with residential construction best positioned to perform well.

The LAEDC's report said 51,150 new housing units should be permitted in the five-county area this year, with 55,200 following in 2003.

But while these forecasts are taking a snapshot of the entire year, CSULB's report said most sectors are expected to improve over the next few months, including construction, services, retail and government work. But not until 2004 will the recovery extend to manufacturing, where job losses have occurred across the region, the report states.

Compared with the nation as a whole, where jobs were lost at a rate of 3 percent in late 2001, Southern California is recovering from the economic downturn fairly quickly, CSULB economist Grobar said. She added, however, that the region was hit harder by the slowdown than was the rest of the nation and therefore the region has had further to go in its economic recovery.

``Our outlook ... is for the region to continue to do better than the nation,'' she said.

Los Angeles County, which lost jobs overall in the last quarter of 2001 and the first quarter of 2002, is expected to recover somewhat in the third quarter of this year. But because of the recent employment losses, the economists predict, the county will neither add nor lose jobs overall in 2002. But next year, the county should add jobs at a rate of 1.2 percent, the report predicts.

Though manufacturing accounted for much of L.A. County's recent difficulties, jobs were also lost early this year in construction, services, federal government, wholesale trade and utilities, the report states. It says this trend should turn around in the second half of this year, contributing to the overall recovery in 2003.

Orange County, meanwhile, is doing ``significantly better'' than L.A. County. The report says Orange County added jobs at a rate of 2.1 percent last year, and that the county is positioned to add jobs at a rate of 1.3 percent in 2002, followed by 2.1 percent employment growth in 2003.

Riverside and San Bernardino counties continue to be the region's strongest job producers, having added jobs at a rate of 4.1 percent in 2001. But the two counties are not immune to the slowdown, the report states. It calls for a slight slowdown to 3.2 percent growth in 2002, picking up to 3.7 percent in 2003.

The economic slowdown has hit Ventura County relatively hard, roughly halving its job growth rate to 1.9 percent in 2001. It is the only county in the region that's expected to post an overall job loss this year with a slight employment decline of 0.2 percent. Growth is expected to return next year with a 1.3 percent employment increase.

Factored into the university's forecast is an assumption that the Federal Reserve Board will raise interest rates soon but not drastically, Grobar said. Other assumptions are that ongoing turmoil in the Middle East will not escalate and that the United States will not suffer another major terrorist attack.

``There are always things that we can't quantify,'' said Joseph Magaddino, chairman of the university's economics department. ``It's possible that the Middle East (conflict) escalates and that disrupts the delivery of petroleum and (pushes) crude prices up. That could change the scenario.''

A housing shortage could also influence the region's economic outlook. As the economy has slowed, home prices have risen by about 10 percent across the region. That's not necessarily a good sign, Grobar said.

``As the regional economy recovers, that's going to create even more (demand for) housing, which could quickly lead prices to become very unaffordable for most residents,'' she said.