UCLA expects recession to carry into '92.UCLA UCLA University of California at Los Angeles UCLA University Center for Learning Assistance (Illinois State University) UCLA University of Carrollton, TX and Lower Addison, TX expects recession to carry into '92 Real estate, defense and finance woes delay upturn The office vacancy rate in downtown Los Angeles Downtown Los Angeles is the central business district of Los Angeles, California, located close to the geographic center of the metropolitan area. The sprawling, multi-centered megacity is such that its downtown core is often considered just another district like Hollywood or could soar to more than 30 percent next year, and real estate foreclosures and bankruptcies should continue to rise, predicted David Hensley, director of the UCLA Business Forecasting Project, in a report issued last week. The weak real estate market, when combined with cutbacks in the defense and finance industries, will probably keep the state in a recession into 1992, said Hensley. The shakeout in real estate will continue, he said. "In all segments of real estate, foreclosures are rising as owners of everything from raw land to hotels to office buildings are unable to make loan payments. Buyers for these properties are hard to find, because asking prices are too high. Eventually, prices must fall enough to make ownership of these properties profitable, a process destined des·tine tr.v. des·tined, des·tin·ing, des·tines 1. To determine beforehand; preordain: a foolish scheme destined to fail; a film destined to become a classic. 2. to be riddled with more bankruptcies and foreclosures, and further employment losses." California is facing a double-whammy similar to a recession that wracked the state economy in 1970, said Hensley: A general business slowdown, accentuated by defense industry cutbacks (back then, in the slowdown following the Vietnam War Vietnam War, conflict in Southeast Asia, primarily fought in South Vietnam between government forces aided by the United States and guerrilla forces aided by North Vietnam. ). Hensley noted that the volume of help-wanted advertisements in the Los Angeles Times Los Angeles Times Morning daily newspaper. Established in 1881, it was purchased and incorporated in 1884 by Harrison Gray Otis (1837–1917) under The Times-Mirror Co. (the hyphen was later dropped from the name). continues to sag and is now at 49 percent of its level in early 1990. Still, by next year the state economy should begin to grow again, pulled by the national economic recovery, which is already under way. "As the U.S. economy strengthens, demand for goods and services In economics, economic output is divided into physical goods and intangible services. Consumption of goods and services is assumed to produce utility (unless the "good" is a "bad"). It is often used when referring to a Goods and Services Tax. produced in California will grow, boosting the California economy. The assist will be most apparent in manufacturing, tourism-related industries and wholesale trade," said Hensley. Total non-military employment statewide should increase by 1.2 percent to 12.99 million in 1992, while personal income and retail sales should outstrip out·strip tr.v. out·stripped, out·strip·ping, out·strips 1. To leave behind; outrun. 2. To exceed or surpass: "Material development outstripped human development" the rate of inflation. Median new home prices should remain stable in the $230,000 range. Not participating in the recovery will be aerospace employment and non-residential construction, predicted Hensley. Non-residential construction should fall by 8.9 percent in 1992, as oversupply o·ver·sup·ply n. pl. o·ver·sup·plies A supply in excess of what is appropriate or required. tr.v. o·ver·sup·plied, o·ver·sup·ply·ing, o·ver·sup·plies continues to glut glut pronounced as rut, slut Vox populi An excess of a service or skilled labor in a particular area. See Physician glut. the marketplace. Statewide aerospace manufacturing employment, which has fallen to about 304,000 now from a peak of 375,000 in 1988, will drop by another 38,000 jobs by the end of 1993. The long-term reduction of real defense spending gets the blame for the aerospace job reductions, said Hensley. The California economy
1991 1992 [+ or -] %
Employment(1) 12,838 12,995 +1.2
Personal Income(2) $639.8 $680.9 +7.8
Residential Building Permits(1) 114.1 159.3 +39.6
Nonresidential Construction(3) $7,561 $6,889 -8.9
Retail Sales(2) $223.7 $241.1 +7.8
(1)In thousands (2)In billions (3)In millions of 1982 dollars Source: UCLA Business Forecasting Project |
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