FORECASTING FINANCIAL FUTURE; NEXT CENTURY WILL BRING JOBS TO STATE, REPORT SAYS.

Byline: Gregory J. Wilcox Daily News Staff Writer

Led by a surging service sector, Californian employment will mushroom by about 50 percent during the first two decades of the next century but the economy is showing signs of slowing short term, according to a widely watched forecast that will be released today.

This broad job category, which includes services provided by banking and insurance companies, wholesale and retail trade, and government, will increase its share of nonfarm employment from 81.5 percent in 2000 to 87 percent in 2020, according to the quarterly economic forecast of UCLA's Anderson School.

California's overall job growth will parallel gains in population, but Los Angeles County will experience a smaller growth rate of new residents during the next 10 years than areas like the Inland Empire and Orange and San Diego counties, the report says.

The forecast is a long-range snapshot of a new state economy that evolved as California recovered from its most severe slump since the Great Depression. Typically the forecast looks out over the next several years.

``It's a new economy in the sense that we won't have the kind of reliance that we did in the past on defense spending,'' said Tom K. Lieser, the forecasting project's executive director and author of the California report. ``We will remain reliant on international trade, which is a long-run plus and a short-term minus.''

The short-term negative is because of the economic turmoil in Asia and Russia. But the report's forecasters and other think tanks predict its short-term impact will be less painful than the end of Cold War hostilities at the beginning of the decade that plunged the state into a deep recession.

While the state's economy will expand at what economists say is a moderate rate over the next 20-plus years, it likely won't match an earlier performance.

For example, personal income grew by 4.3 percent annually between 1960 and 1990. But it is expected to average 2.8 percent annually from 2000 to 2020, the report predicts.

The key to meeting the report's growth predictions is building enough new homes and apartments for the influx of job seekers. Residential building permits are expected to average about 270,000 units annually by 2005, the study says.

Bruce Smith, an economist at the California Department of Finance, said the forecast is a reasonable estimate.

He noted there is still room for new housing developments in sections of Southern California like the Inland Empire and northern Los Angeles County, while the situation is tighter in the Bay Area.

Meanwhile, short-term evidence of some economic cooling already is showing up. For example, during the first seven months of this year, Los Angeles County's economy slowed to a 1.6 percent growth rate vs. 2.8 percent in the comparable period during 1997.

That being the case, it is important to stay focused on what's around the bend as well as over the horizon, cautioned Jack Kyser, chief economist for the Los Angeles Economic Development Corp.

``I'm a little concerned because you've got so many balls up in the air,'' he said referring to the world economic situation, potential problems associated with computers not being able to communicate with each other after the year 2000 and growing concern that a dock workers strike along the West Coast could paralyze commerce next summer.

``There is a growing probability we will have some type of slowdown, and I will use the `R' word,'' Kyser said. ``There is a 40 percent possibility we could go into a recession in 2000.''

STRONG GROWTH

Nonfarm payrolls in California are expected to increase 2 percent annually over the next two decades.

PROJECTED NONFARM EMPLOYMENT IN MILLIONS

1998: 13,580

2020: 21,394

SOURCE: UCLA Anderson Forecast

CAPTION(S):

Chart

CHART: STRONG GROWTH (see text)

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