Two things we need to give great attention in a hurry. (From the Newsroom).

AMONG all the well-timed economic forecasts I've listened to in the past few weeks and the surveys I've seen summarized, there's definitely cautious optimism. about how the U.S. economy -- and with it the Valley -- will fare in the coming months of 2003 and into early 2004. But it all makes me as jittery as the war in Iraq does.

There's so much couching and qualifying of the predictions that the exercise of figuring out where we might be going seems meaningless.

But with the war raging as I write this, another part of me feels that there's a lot to be gained from looking closely at some of the themes in these reports. In them, clearly outlined are some issues that must be dealt with before we can get truly healthy for the long term.

Enter Wells Fargo economist Sung Won Sohn, who gave his opinion on where things are headed recently at a forum in Camarillo. Sohn, although generally too optimistic for my tastes, said the burst of any housing bubble that might be forming would be far worse than a stock market crash. That's because there's far more money hung up in houses for the average person than in the stock market.

Housing has become such a big part of our economy now that it's one of the major engines (not Sohn's comments, but mine). Shut that off, things will sputter.

That leads to another thing Sohn said -- something far more dangerous than the bursting of a housing bubble which no one thinks will happen in the L.A. area anyway. The far more important and dangerous issue is housing affordability. Add to that the Valley's housing shortage and you have a real volatile situation. The average person around here just isn't able to afford the average house if they can find one.

The affordability issue could put a drag on the economy with or without a prolonged war in Iraq.

Enter Jack Kyser, chief economist for the Los Angeles County Economic Development Corp., who also mentioned the housing shortage in his report to the Economic Alliance of the San Fernando Valley at its Info Summit last week.

As did Liam McGee, chairman of the United Way of Greater Los Angeles and president of Bank of America California, in far stronger terms at the summit than Kyser. Also joining in on the issue at the same event was Henry Cisneros, former HUD secretary and founder of American CityVista which builds affordable homes.

McGee called the housing issue the single most threat to economic expansion.

"California desperately needs to unleash its housing industry, McGee said, citing a host of impediments to building in the state including too many fees, tort issues and residents nearby developments who are never satisfied with environmental reports on a project.

Development of housing in California is moving at a glacial pace keeping many even moderate-income individuals from getting to own their own property. This can only lead to disenfranchisement, the widening of the gulf between rich and poor and a major pull on the economy if most people here spend most of their money on keeping a roof over their heads and not on buying other things.

The answer seems to lie with city and state officials who really must get a handle on this before it's too late. In L.A., Mayor Hahn's housing fund is a noble start, but housing must be a top priority both in the city and in the state.

As with housing, another huge problem that economists discussed and a Valley quality of life survey done by the Rose Institute at Claremont McKenna College shed light upon is the failure of our politicians in Sacramento and the trepidation Valley residents still have toward Los Angeles City Hall.

Kyser hammered the state government calling it unwilling to care about business.

In a recent discouraging trip to the state capital, Kyser said he was appalled by officials' outlook toward business.

"Business was viewed as the enemy," he said.

Workers' comp is a mess and the whole financial structure of the state is driving businesses away.

The Rose Institute survey offered slightly better results for local politicians, but it still wasn't great.

Valley residents are liking their council people more, generally due to the accomplishments of individual members of the council than the body as a whole. Forty percent of respondents gave their city council an excellent or good rating, while 43 percent rated it fair or poor.

Mayor Hahn didn't do so well. Only 29 percent of respondents rated him excellent or good while 46 percent graded him fair or poor. Maybe it's residual effects of his anti-secession efforts.

But whatever the reason, one thing is sure -- downtown still needs to reach out more to the Valley.

Housing and politics. They're big drags on our economy. They're no death or taxes, but they're pretty important right now.

Business Journal editor Jason Schaff can be reached at [phone] or by e-mail at: [e-mail].