ROUGH RIDE FOR ECONOMY HOUSING MARKET SKID CITED IN LACKLUSTER 2007 FORECAST.

Byline: JIM SKEEN

Staff Writer

LANCASTER -- A bumpy economic ride lies ahead this year thanks to a drop in the housing market and a dip in consumer spending, an economist told a gathering of Antelope Valley business and civic leaders Friday.

Economist Christopher Thornberg told the 35th annual Antelope Valley Board of Trade Business Outlook Conference that there are signs of a slowing economy. The event drew around 1,000 business and civic leaders.

"Tighten your seat belts, it's going to be a rough ride," he said.

Thornberg is the founder of Beacon Economics, a consulting firm that specializes in regional economic forecasts. For six years, he worked as senior economist for the UCLA Anderson Forecast.

The full effects of the downturn in the housing market are yet to be seen. It takes about two years for the impact to be known and the industry is just about halfway into that cycle.

Thornberg said the argument that California still has a housing shortage is misleading because the shortage is in the area of low-cost rental units, not homes.

Another troubling sign is the fact that last year people spent 1.5 percent more than what they earned after taxes. About 9 percent of the consumer spending has been fueled by people borrowing against the equity of their homes -- and now that equity is drying up.

But not all the news is bad. Inflation and interest rates remain low, and employment and corporate profits are up, he said.

The Antelope Valley can expect to see defense spending stabilize, and the high desert remains the cheapest place to live in Los Angeles County.

There was good news delivered at the conference by the Greater Antelope Valley Economic Alliance, whose officials unveiled their 2007 economic round-table report. Among the findings was that the Antelope Valley's number of jobs grew 11.2 percent from 2004 to 2005 with 88,232 jobs.

james.skeen@dailynews

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