HAHN TOLD RECOVERY IN WORKS U.S. RECESSION MIGHT LIFT BY MIDSUMMER AT EARLIEST.

Byline: Rick Orlov Staff Writer

Economists warned Mayor James Hahn and other city officials Monday that recovery from the national recession won't happen until midsummer at the earliest and a full recovery until next year.

At an annual economic forecast for Hahn, city department heads and budget experts, the economists also said there were signs of a slowdown before last Sept. 11 and the problems now being faced cannot be solely blamed on the terrorist attacks of that day.

``This recession was not caused by the events of Sept. 11,'' said Chris Thornberg, senior economist at the UCLA Anderson Forecast. ``Obviously, (the attacks) had an impact on airlines and tourism, but this recession started well before Sept. 11.''

In particular, Thornberg said many people came to believe there was no end in sight to the growth being seen in the stock market and in the high technology industries - until both began to fall apart.

Hahn said the briefing was important to help provide guidelines to the city as it prepares to develop its budget and project how much money will be coming in to finance programs for the coming year.

``For us to budget to develop new programs, we need to know how much money we will be getting,'' Hahn said. ``We need this extra help to let us do the best job we can.''

Thornberg said the last three months of 2001 were better than expected due to some one-time boosts to the economy from industries such as automakers, who slashed prices to sell vehicles.

``Some of what we saw was a one-shot boost to the economy,'' Thornberg said.

The hardest-hit sector of travel and tourism doesn't appear to be facing much of a return in the near future, said Bruce Baltin, senior vice president of PCF Consulting.

While Los Angeles had its best year in tourism history in 2000 - thanks to the Democratic National Convention and the strong economy - that dropped off last year, even before Sept. 11.

The terrorist attacks added to the local problems - particularly in the loss of Asian tourists, a market that might take more than a year to recover.

In addition, Baltin said Los Angeles has more competition from Anaheim and San Diego, which have completed additions to convention facilities.

``I wish I could say we were recovering as dramatically as we fell,'' Baltin said. ``Unfortunately, I can't.''

About the only continuing bright spot locally has been the real estate market, said Gerd-Ulf Krueger of Institutional Housing Partners.

Home sales have remained strong throughout the Los Angeles area and are expected to remain so, Krueger said.

Much of the demand has been for higher-priced properties over the past year, which should decline somewhat in favor of more moderately priced housing, he said.

Jack Kyser, chief economist for the Economic Development Corp. of Los Angeles County, said sales of industrial and commercial properties also should see an increase during the coming year.

City Administrative Officer Bill Fujioka, who has said the city needs to make some $155 million in budget cuts this year, said the advice from the economists confirmed the city's own views about the future.

``It's going to be a tight year or two,'' Fujioka said. ``But, I don't think that comes as a surprise to anyone.''

Kyser said one of the biggest uncertainties facing local government is how the state manages its own $12 billion budget deficit.

``That could be a problem that doesn't go away for five to seven years,'' Kyser cautioned.