BOOMING INTO 2000; ALL'S ROSY IN FORECAST ON ECONOMY.

Byline: Gregory J. Wilcox Daily News Staff Writer

California's economy, which shifted from cruise control to overdrive last year, built enough momentum during that time to remain prosperous beyond the millennium, predicts a UCLA forecast that will be released today.

The state will see continued job growth over the near term that will drive unemployment down to 5.3 percent by 2000 from the current 6.3 percent, according to the widely watched UCLA Anderson Forecast.

The quarterly report foresees job growth of 3.3 percent this year, 2.6 percent in 1999 and 2.5 percent in 2000. That adds up to 1.2 million new jobs across the Golden State, enough to inoculate the economy from a severe case of ``Asian flu'' and shield it from effects of El Nino storms.

As of Tuesday - the end of the first quarter of 1998 - about 500,000 jobs had been created during the previous 12 months.

``A job gain of that magnitude has not been seen in California for nearly 14 years and likely represents the strongest gain we will see during the current expansion,'' said Tom K. Lieser, associate director of the Andersen School's Business Forecasting Project and one of the report's authors.

Even the weakened Asian economy and severe weather this winter in some areas pose minimal long-term threats.

``There will be limited damage from each of these disturbances,'' Lieser said. ``The real story of the state's economy is one of renewed vigor, resilience and diversity.''

One source of optimism is the fact that the state added more jobs last year, especially in Southern California, than previously thought.

For example, San Diego County's growth came in at 4.3 percent, up from the previous estimate of 2.2 percent. The Riverside-San Bernardino area's came in at 4.9 percent, up from 4 percent, making it one of the state's fastest-growing areas.

``That's hot. They are showing the second-strongest growth in the state. The only area that is better is San Jose,'' Lieser said.

In Los Angeles County, the 1997 growth rate was revised upward to 2.2 percent from 1.9 percent. But the 1996 figure had been revised down to 1.1 percent from 1.6 percent.

Still, even recent announcements of further consolidation in the financial service sector through Washington Mutual Inc.'s buyout of H.F. Ahmanson & Co., as well as Boeing Co.'s slashing of more than 5,000 local jobs, should not derail the economic expansion.

``I think we can offset those blows, particularly over a several-year period,'' Lieser said. ``We kind of anticipated that and to some extent it was in our forecast.''

One difference between any cutbacks now and those at the early part of the decade is that jobs are available at other companies for displaced workers.

Here are some snapshots of the forecast:

Unlike the nation, California will continue adding manufacturing jobs - about 36,000 in nondurable goods during the next three years. More than half will be in textiles.

Durable-goods manufacturing will add 45,000 jobs through 2000, including 21,000 in electronic components and computers, while aerospace employment will remain stable.

California is seeing its strongest growth in real income since the mid-1980s. Personal income rose 6.5 percent last year, its best performance since an 8.2 percent jump in 1990. But 1990 was a high inflation year - 5.5 percent, which just about wiped out income gains. Inflation rose only 2 percent last year.

Unlike previous expansions, this one has been marked by relatively little activity in home building. The forecast is for requests for building permits to increase during each of the next three years.

In another indicator of an improving housing sector, a tracker of the real estate industry reported that California foreclosure activity continued to drop during February, though not by as much as anticipated.

Lenders statewide filed 11,333 default notices on houses and condominiums in February, a decrease of 5.5 percent from January and 10.7 percent from February 1997, Acxiom/DataQuick Information Systems reported Tuesday. A notice of default is the first step of the formal foreclosure process.

The report marked the 14th consecutive month for a decline in default notices from the same period the previous year, and the number was well below the peak in March 1996, when 15,475 homeowners were drawn into the foreclosure process.

Some economists have characterized the UCLA quarterly outlooks as being overly optimistic - as in December 1993, when co-director Larry Kimball predicted the end of the state's recession and the addition of more than 1 million new jobs over the next four years. As it turned out, Kimball was too cautious - with that growth coming in just three years.

Ted Gibson, chief economist for the California Department of Finance, thinks the latest outlook is reasonable.

``The big question that we have has to do with Asia. We still, in my mind, have not seen any employment effects, and we may see them before too long. But if you look at their record (the UCLA forecasters'), compared to what's transpired, they for the most part have gotten the flavor correct.''

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Chart: More jobs coming

SOURCE: UCLA Anderson Forecast