Economy's funk could end with a hissing sound.

Turns out that a hot housing market and booming international trade only get you so far.

After a protracted stretch of modest job growth that is likely to last through the end of the year, there are growing prospects of a slowdown in 2006, although the timing and severity of what might happen depends, as usual, on which economist is doing the talking.

"If I were a corporate executive in L.A., I would be very cautious fight now. There's little upside potential in the local economy, but lots and lots of downside risk," said Esmael Adibi, director of the A. Gary Andersen Center for Economic Research at Chapman University in Orange.

If there's any common sentiment at the mid-year point, it's vulnerability. Whether it's the housing market, oil prices, inflation or renewed acts of terrorism, there is little cushion for an economy that has been in stutter-step mode for some time.

Of course, the supposed housing bubble has been waiting to burst for nearly two years--and so far it hasn't. Gas prices, too, were seen as putting a squeeze on consumer spending, but consumers have so far looked the other way. And defying earlier expectations, long-term interest rates have stayed low.

Given all that, home purchases and refinancing are likely to keep the local economy going, if slowly.

As a large, mature economy, L.A. County tends to lag other regions of the state when it comes to job growth, but the outlook is especially anemic--about a 1 percent rate for the rest of this year, thanks mainly to the real estate and construction industries and trade with Asia.

The loss of manufacturing jobs--150,000 since 2000--hasn't been fully offset by other sectors. And if the housing market cools or energy prices spike again, even the small rate of job growth could be choked off.

Slow recovery

Looking more broadly, L.A. County employment is still well below the pre-recession high of 4.1 million reached in March 2001. Since then, the number of countywide jobs has bounced around the 4 million mark, while the state overall has gained back all the 350,000 jobs lost from 2001 to 2003.

Statewide job gains have been driven largely by growth in places like the Central Valley and the Inland Empire--some of them at the expense of manufacturing jobs in L.A.

Some employers have set up shop in parts of the state where land is cheaper; others eliminated jobs altogether or outsourced them overseas. No other sector of the local economy has stepped up to offset the losses in manufacturing.

"Outside of the real estate and construction sectors, I don't see where the driver is of the L.A. economy," said Christopher Thornberg, senior economist with the UCLA Anderson Forecast. In his California forecast last month, Thornberg projected low levels of job growth for next year, with a high risk of a recession.

The key barometers for ganging local performance over the next six to 12 months remain long-term interest rates, home prices and oil and gasoline prices. "So much of what we're looking at is what's going on with the nationwide economy," Adibi said. "Because it is so large, L.A. is very dependent on what happens nationwide."

Take mortgage rates, which have remained between 5 percent and 6 percent--even as the Federal Reserve Board has raised short-term rates nine times. Some economists say this phenomenon reflects a globalization of debt markets that isn't likely to be reversed anytime soon. Others consider the low rates to be part of a cyclical swing. They say easy terms and low payments have exaggerated imbalances in the U.S. housing and debt markets.

Whatever the reason, L.A. County home prices continue to march upward. In May, the median price was $459,000, up 16.5 percent from a year earlier, according to DataQuick Information Systems.

Perhaps just as telling, the number of people who could afford to purchase median-priced homes in the Los Angeles region fell in May to 15 percent, down from 18 percent for the like period a year earlier. Statewide, the figure was 16 percent. The monthly California Housing Affordability Index is based on home prices, income and mortgage rates and other housing costs.

Energy prices, trade

Another wild card is energy. Gas pump prices topped $2.50 per gallon several times this year, but the impact on the larger L.A. economy has so far been limited. "We may be seeing some of the wealth effect from the housing market absorbing the shock here," Adibi said.

In real terms, gas prices are still below levels reached in the 1970s. But with the price of a barrel of crude oil reaching $62 last week and fears that the terrorist bombings in London could push oil prices even higher, a key question is whether gas prices are approaching a threshold where consumers will have to cut back on spending in other areas.

"We've been resistant so far to oil prices, but we can't hang on like that forever," said Stephen Levy, director of the Center for the Continuing Study of the California Economy in Palo Alto. "Whether the threshold level is $3 a gallon, $3.50 a gallon or even higher, we just don't know."

Higher prices for basic materials like concrete and steel have also hit the bottom lines of businesses. And global competition limits their ability to raise prices, so profits are getting squeezed, leaving less money for payroll or reinvestment.

"These companies may end up cutting back, which could in turn contribute to a broader economic slowdown," said Dawn McLaren, economist with the Blue Chip Economic Forecast at the W.P. Carey School of Business at Arizona State University.

Another fear: Continued spikes in oil and other commodities could drive up inflation, prompting the Federal Reserve Board to raise interest rates at a faster clip.

"That could dry up lending and overall investment," said Dennis Meyers, principal economist with the state Department of Finance.

Should the real estate and construction engines falter, L.A.'s economy would have to rely on international trade as its key growth driver. And while the dollar volume of goods passing through L.A.'s ports has been growing by double digits virtually every year, there are concerns there as well.

Trade tensions with China have risen in light of the unsolicited $18.6 billion bid by China National Offshore Oil Corp. for El Segundo-based Unocal Corp. CNOOC's bid has sparked a backlash on Capitol Hill that could chill the climate for future trade and investment in China.

Though it's not a likely scenario, L.A.-area companies with business dealings with China or import-export arrangements--particularly among local garment makers--could get hit if there is any disruption of trade. More likely, said Levy, trade with China will continue to be a plus for the L.A. economy.

Beyond all these factors are the true "wild cards," such as an extended heat wave causing an electricity shortage in Southern California or another terrorist attack wreaking havoc on tourism and financial markets--even though world markets quickly recovered from last Thursday's bombings in London, with one analyst noting that traders have become used to uncertainty.

"We're walking through a whole bunch of difficult threats here," Levy said. "So far, we've managed to get through them. But any one of these could throw a giant wrench in things and cause great economic pain."