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 SAN FRANCISCO, Feb. 1 /PRNewswire/ -- /NOTE TO EDITOR: The following news release provides economic information on these states: Alaska, Arizona, California, Hawaii, Idaho, Nevada, New Mexico, Oregon, Texas, Utah, and Washington. If you would like a copy of the six-page Economic & Business Outlook report, call the contact numbers below./
 The United States economic recovery is evident in many Western States, including Texas, Utah, Idaho, Arizona, Nevada, and New Mexico, according to Frederick Cannon, vice president and senior economist at Bank of America (NYSE: BAC).
 In each of these states, the job market is healthy, personal income is up, and housing activity is rebounding, Cannon writes in the January 1993 issue of the Bank's Economic & Business Outlook that focuses on the Western Region of the United States. By contrast, says Cannon, there are no consistent signals in the Pacific States -- which include California, Oregon, Washington, Alaska, and Hawaii -- that an economic expansion is underway. In all the Pacific states, the job markets remain weak and there are no signs of significant improvement in housing activity.
 At the same time, the report points out, regional problems in Southern California are spilling over to Northern California and the surrounding states; aerospace layoffs are slowing the economy in the State of Washington; and economic adversity in Japan is dampening the outlook for Hawaii.
 Nevertheless, a continued national economic expansion in 1993 will boost activity in many parts of the Western Region, but the Pacific States are unlikely to experience a rebound until later in the year, says Cannon.
 Factors Affecting The West
 The economic performance of the Western States in 1993 will be determined largely by the strength of the national expansion, an economic recovery in Japan, and the stabilization of the economy in Southern California, says Cannon.
 Economic Expansion -- The U.S. economy showed signs of strength in late 1992 as business investment picked up, and retailers experienced a strong holiday season. The durability of the recovery, however, will be tested in 1993 by whether or not substantial job growth follows the pickup in economic output and sales, Cannon believes. If substantial national job growth develops, the Western States will benefit and begin a period of broad-based growth, he forecasts.
 Japanese Recovery -- Japan is the West's biggest export market and has provided large amounts of capital for the region's economic development. The Japanese economy was hit hard during the last two years as real estate values declined and the country's stock market was pummeled.
 As a result, the growth in Japan's money supply remains weak, industrial output has slowed, and Japanese foreign investments have been constrained. To help the country's sagging economy, the Japanese government is planning a large fiscal stimulus in 1993 that should support a modest recovery late in the year. The Western States will benefit when Japanese foreign investment begins to increase later this year, notes Cannon.
 Southern California Stabilization -- Southern California is the West's largest regional economy, accounting for 20 percent of the area's output, but that part of California is suffering a deep downturn, says Cannon. The problems in Southern California are the result of a number of negative factors hitting the region's economy simultaneously, including defense cutbacks, the national recession, overvalued real estate, high business taxes, and cumbersome business regulations.
 Nonetheless, the region retains a large degree of industrial diversity and is in a good geographic position to benefit from the North American Free Trade Agreement and growth in Southeast Asia. As the Southern California economy stabilizes in 1993, the entire Western Region will benefit, Cannon concludes.
 If these three factors materialize in some fashion in 1993, moderate economic growth can be expected throughout the Western States, according to the report.
 ALASKA -- Although still expanding, the economy of Alaska slowed remarkably during the last half of 1992. Year-over-year employment growth is now less than one percent. Economic conditions in Alaska have been reduced by a drop in tourism and cutbacks in investments by the Japanese. In addition, energy prices have fallen and the oil and gas industry has been stagnant. Improvement in the state's economy is unlikely in early 1993. However, if the Japanese and U.S. economies improve, Alaska's employment activity should expand by mid-year.
 ARIZONA -- The state's economy continued to pick up in late 1992, but at a slower rate than many other states in the West. Arizona is still being hit hard by defense-sector layoffs due to the concentration of missile manufacturing in the state. As a result, manufacturing employment in Arizona has declined more than nine percent in the last two years.
 In addition, the problems in Southern California are spilling over to Arizona. Southern California is the largest market for goods and services produced in Arizona, many firms that are active in Arizona have their headquarters in Southern California, and Southern California is a major source of many of the tourists that come to Arizona. Because of this, the deteriorating conditions in Southern California have reduced the opportunity for Arizona to participate fully in the national recovery.
 However, Arizona's economy has been going through a prolonged slowdown since 1988, and the problems in Southern California are limiting the state's recovery rather than causing the downturn. Fortunately, Arizona is poised for further recovery in 1993 as a result of the national upturn and a strong expansion in housing. Any stabilization in Southern California would add to Arizona's recovery.
 CALIFORNIA -- Despite strong signs of a national economic rebound, the state's economic signals remain weak. Statistics for November 1992 showed a year-over-year decline in employment of 1.8 percent. The rate of decline in employment, however, does appear to be slowing down. In November 1991, the year-over-year drop in that economic indicator was 2.9 percent.
 Despite the slowdown in the rate of deterioration in California, December's unemployment rate at 9.7 percent is high compared to the national rate of 7.3 percent. Unemployment in the state is high as a result of more people coming to the state and looking for work, as well as the weak job market.
 California's housing market has shown some signs of improved activity in recent months, with existing home sales increasing in October 1992 to 417,100 units sold on an annualized basis compared to 374,200 the prior month. In spite of the increase, home prices remain weak because more homeowners are being forced to sell their homes as a result of job losses.
 However, the housing market in California is poised for a recovery when the job market in the state stabilizes.
 The affordability ratio (the percent of households that can afford a median-priced home) has increased to 32 percent in California. This is the highest level it has been at since 1987, and it hit that point just prior to a rapid escalation in home prices and sales.
 The economic weakness in the state remains particularly acute in Southern California. Job losses in the south have accounted for nearly 80 percent of the job losses in the state as a whole, and the unemployment rate in Southern California is nearly 11 percent, while it remains below eight percent in the San Francisco Bay Area.
 The rate of job decline in Southern California, however, has slowed recently. During the past 12 months, Los Angeles County has lost only 2.6 percent of its jobs, compared to a loss of 4.6 percent in the year earlier period.
 HAWAII -- The economy in Hawaii has deteriorated rapidly during the past year, with the state dropping down to being the 40th fastest growing economy in the nation in September 1992 from being the sixth fastest growing one year earlier. Along with the impact of the hurricane, the state's huge tourist industry has been hit hard by the economic slowdown in Japan.
 The state's economic outlook in 1993 will be determined largely by the success of Japanese monetary and fiscal policy to stimulate that country's economy. Nevertheless, even with a turnaround in Japan, Hawaii is unlikely to rebound to strong rates of growth until late 1993.
 IDAHO -- The state's economy continued to expand rapidly through late 1992, with diversified job growth. Not only did Idaho rank third nationally in total job growth from September 1991 to September 1992, but the state also ranked second in manufacturing job growth over that same interval.
 The strength of the state's basic manufacturing sector suggests that this industry will continue to grow at a strong pace in 1993. Idaho has been able to attract a number of small- and medium-sized firms to the Boise area as a result of the area's low cost of living, high quality of life, and positive business climate.
 When final figures are available, employment gains in Boise, the state's largest metropolitan area, will approach six percent in 1992, and Idaho will again be a top state in the nation for job creation in 1993.
 NEVADA -- Through the end of 1992, Nevada continued to post positive job gains, but the state's rate of growth is slow compared to its expansion in 1990.
 Total job gains in 1992 in Nevada are expected to be 2.6 percent, up somewhat from the 1.9 percent gain in 1991, but down significantly from the 6.9 percent gain in 1990. The slowdown is the result of reduced growth in the state's gaming industry. As a result, jobs in wholesale and retail trade employment and service employment grew only one percent from September 1991 to September 1992. The gaming industry accounts for 26 percent of all jobs in Nevada, and its contribution to the state's general fund revenues amounts to 42 percent of the total state budget. However, the state's fastest growing sectors are now construction, with job increases of more than seven percent from September 1991 to September 1992, and government, with employment gains of four percent during that same period. Unfortunately, this growth in construction and government is not sustainable without a substantial increase in gaming and general employment. As a result, rapid growth in Nevada is unlikely in 1993.
 NEW MEXICO -- The economy in New Mexico has posted job gains throughout 1992 despite reduced federal defense expenditures, which account for a large share of the state's economy. The impending North American Free Trade Agreement is boosting investment along the New Mexico-Mexico border. In addition, the state benefits from a strengthening economy in the neighboring states of Colorado and Texas, and a positive business climate that is attracting diversified industries.
 New Mexico is expected to continue growing at a moderate pace in 1993, with defense cutbacks the only factor keeping the state from rapid economic growth. The ratification of the North American Free Trade Agreement, which is expected to occur this year, will add to the capital investments already coming to New Mexico.
 OREGON -- As a result of cutbacks in timber harvests and the weak neighboring economies in California and Washington, Oregon's economy did not meet expectations of moderate growth in 1992 . However, timber prices are getting better as national housing demand increases and low supplies persist due to environmental regulations.
 Because of improved prices and negotiated settlements with environmentalists, timber operations should expand somewhat in 1993. In addition, any stabilization in the California economy will boost the market for Oregon goods and services, and should set the stage for moderate economic growth in Oregon in 1993. Furthermore, Californians are continuing to move to Oregon, increasing the population and expanding economic activity.
 TEXAS -- With more than seven million people employed, Texas has the strongest economy of any large state in the nation. Despite recent declines in oil prices, the state has continued to post solid job gains in diversified industries, including manufacturing, services, and trade.
 As a result of a severe recession in the state in 1986/87, Texas has reduced its excess capacity in real estate inventories and manufacturing facilities. In addition, the low prices of real estate and a positive business climate in the state are drawing businesses to Texas. Moreover, the University of Texas at Austin has developed a strong identity with high-technology research, resulting in an emerging high-tech industry in the region.
 In addition, with its large southern border, Texas will benefit strongly from the expected ratification of the North American Free Trade Agreement in 1993. Overall, if the United States gains strength, Texas will have strong economic growth this year.
 UTAH -- As of September 1992, the latest month for which statistics are available, Utah was leading the nation in terms of employment growth. Job growth in the state has been strong in all sectors except manufacturing. For example, construction employment increased at a seven percent annual rate during 1992 as low interest rates and a healthy job growth have increased demand for housing.
 Utah's economy should continue to experience a strong expansion into 1993. However, the state's stagnant manufacturing sector raises concerns about how long rapid rates of growth can be sustained.
 WASHINGTON -- In the second half of 1992, Washington's economy began to slow. One of the reasons this occurred was that a slowdown in airplane orders was causing layoffs in the Seattle area.
 With continued cutbacks in airline employment and profits, airplane sales are expected to continue to be soft throughout 1993. In addition, the coastal area of the state has been slowed by the weak California economy, which is reducing the market for Washington's goods and services. However, the outlook for eastern portions of the state remain strong, as the resource industries expand.
 For example, the agriculture and timber industries in Washington have suffered from a drought and strict environmental regulations recently, but the outlook for those sectors will be brighter in 1993. Rain and snowfall appears adequate, and some compromise on the Spotted Owl controversy is expected.
 Eastern Washington is also benefiting from diversified job growth as firms move to the region to take advantage of low land costs and a supportive business climate. Overall, however, the problems in the western part of the state will moderate economic growth in Washington in 1993.
 -0- 2/1/93
 /CONTACT: Jack Houseman, 415-622-5324, or Shirley Norton, 415-622-4041, of Bank of America/

CO: Bank of America ST: California, Alaska, Idaho, Arizona, Hawaii, Nevada, New Mexico,
 Utah, Texas, Washington, Oregon IN: FIN SU: ECO

TM -- SF004 -- 1433 02/01/93 13:49 EST
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