L.A.'s hottest trend: prosperity.

An economy beyond show biz

From basics to glitz, the Los Angeles economy is on solid ground for 1997, auguring well for local businesses.

In industries reliant on sizzle - apparel, tourism and entertainment - L.A. should maintain its dominance, while retailing and trade will continue to grow.

Meanwhile, the hugely important aerospace and manufacturing industries, in contraction for most of the 1990s, are turning the corner, and will no longer act as a drag on the regional business community.

"Aerospace employment has bottomed out, and will be stable or modestly up next year," said David Hensley, an economist with brokerage Salomon Bros. in New York.

While the banking industry is in the throes of consolidation, L.A.'s money management, investment banking and stock brokerage operations are all booming, thanks to Wall Street's persistent bull market.

All in all, the number of jobs in Los Angeles County is projected to increase by 2.4 percent in 1997, compared with 1996, said Jack Kyser, chief economist with the Economic Development Corp. of Los Angeles County.

"It will be another year of continued improvement, another fairly decent year," said Kyser. "There is nothing out there to suggest a recession."

At the UCLA Anderson Business Forecasting Project, economist Tom Lieser predicts a 2.8 percent increase in statewide employment next year, "and that should generally apply to Los Angeles County," he said.

Entertainment is virtually everybody's darling again for next year, as it is expected to continue its stellar performance as a job-generator for Los Angeles.

Motion picture production in Los Angeles County had a workforce of 140,200 as of November, up 2.3 percent from a year earlier. Although that figure is but a small slice of the 3.92 million employed at businesses countywide, Hollywood's impact on the overall economy is larger because of the huge number of people employed in collateral industries - such as lawyers, accountants, warehousers and costume rental houses.

Some suggest that total entertainment employment may not rise, at least as much as expected, because making money on movies has become tougher.

"The economics are shifting, and moviemakers are looking to cut costs, because it is hard to increase revenues any further," said David Davis, an analyst with investment bank Houlihan Lokey Howard & Zukin in Century City.

Still, Davis noted that production facilities in Los Angeles "are swamped." Indeed, at least two new development projects are in the works to expand the number of sound stages.

More good news is that basic manufacturing, long the backbone of the county economy and still crucial, has stopped contracting.

There are 639,700 people employed on factory production lines in the county, at latest count, including 60,700 in aircraft factories and 125,000 in apparel and textiles.

The total factory job count in November is slightly higher than a year earlier for the county. Kyser and Hensley predict continued small improvements in factory employment.

Basic manufacturing, while not as glitzy as Hollywood, is a key industry. Products made locally are exported from the region, bringing money here in the form of wages and profits. Related jobs are created in trucking, administration and advertising.

Too, factory workers rent or buy housing, spend at retail stores and otherwise generally infuse money into the local economy.

Despite bitter complaints by apparel industry denizens that margins are razor-thin, employment in the garment sector rises inexorably year after year.

Since 1980, apparel and textile employment in the county has risen by about 45 percent, though apparel business owners say some production will shift offshore next year.

Both trade and tourism look positive. "A stronger dollar will limit the increase in trade through the ports, but it will still grow. Tourism will get a boost from the opening up of the new Getty museum," Kyser said.

The world of financial services, in contrast, might be called the tale of two cities. Those connected to Wall Street are going gangbusters, but those in banking and insurance are hoping not to end up on the chopping block in 1997.

Out-of-staters are said to be eyeing Southern California banks and thrifts as acquisitions, and local institutions are eyeing each other. No matter how it shakes out, consolidations in banking mean layoffs.

"The trend will be down (in local bank employment). There will be fewer people, as banks move to more-efficient distribution channels, and as banks consolidate," said Gene Galloway, executive vice president Sanwa Bank California.

The insurance industry, particularly property and casualty insurers, will also see consolidation in 1997, said Jack Berka, managing director at Houlihan Lokey. "The same forces driving banking are going to drive insurance to consolidation. There are hundreds of smaller property and casualty insurers that will be consolidated to get economies of scale," said Berka.

But Wall Street-related financial services are in a near-epic boom. Money managers, securities brokerages and investment bankers all report that they have too much work to do, and that they are looking to hire.

A generally good economic climate - low inflation and steady inflows into mutual equity funds - augur well for 1997, predicted Leib Orlanski, of the Beverly Hills-based Freshman Marantz Orlanski & Cooper law firm.

High-tech companies are growing apace, and will require financings, he said. "We did 12 (initial public offerings) this year. Our previous record was seven, in 1986. I think 1996 will be a platform for 1997," he predicted.

A potential monkey wrench in all of the predictions is the pending re-benchmarking of county employment statistics, slated for February or March of next year.

There was a flap in November, after state labor analyst Vincent Canales, in the Employment Development Department's Los Angeles office, told one reporter that the re-benchmarking would reflect much lower job growth in the county that hitherto believed, perhaps by half. Other analysts, off the record, have said county job growth is coming in at around 1 percent a year.

At UCLA Anderson Business Forecasting Project, all bets are covered. "We should acknowledge a troubling report, as yet unofficial, that Los Angeles County employment may be significantly lower than indicated on current payroll series," wrote Lieser of UCLA, in his latest quarterly forecast.

Lieser added last week, "I wish we had more indications of what is really happening."