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Forecasters at UCR, UCLA disagree on health of regional economy


Forecasters at UCR, UCLA disagree on health of regional economy

(January 4, 2001)

Will 2001 bring a growth or recession to Southern California's economy? That depends on which University of California Anderson business school you ask.

At UCLA's Anderson Graduate School of Management, forecasters, on Dec. 11, predicted diminished growth or possible recession in Southern California and the Inland Empire as investment opportunities dry up, money sources tighten and consumers get cold feet.

But at the A. Gary Anderson Graduate School of Management at UCR, continued growth is expected locally and regionally. A robust construction industry and decent retail sales will fuel local growth in 2001, according to Michael J. Bazdarich, director of the UCR Forecasting Center.

"Some Wall Streeters are extrapolating from slower growth this year to a recession next year. That is not going to happen," Bazdarich said during a forecasting breakfast on Dec. 8. He projected the Inland Empire's job growth rate in 2000 will match 1999's 5.5 percent. Inland Empire job growth will continue at a steady 5 percent clip in 2001, according to Bazdarich.

Meanwhile, UCLA's Edward Leamer predicted recession beginning in the second quarter of 2001 as declining corporate profits, meager investment opportunities, and a tight labor market take their toll on the economy.

Why the difference? Regional vulnerability to recession may be related to an area's reliance on the Internet based, so-called "new economy," which provides software, online content, and computer networking devices, Leamer said. That sector has taken a pounding in the stock market recently.

Southern California won't be hit as hard as the high-tech heavy Bay Area, and the Inland Empire - with a negligible new economy sector - will fare better than Los Angeles and Ventura counties, Leamer wrote.

Michael Bazdarich can be reached at UCR at (909) 787-4592.

Edward Leamer can be reached at the UCLA Anderson Forecasting Project at (310) 206-1438 or via e-mail at edward.leamer@anderson.ucla.edu.

The University of California, Riverside (www.ucr.edu) is a doctoral research university, a living laboratory for groundbreaking exploration of issues critical to Inland Southern California, the state and communities around the world. Reflecting California's diverse culture, UCR's enrollment has exceeded 21,000 students. The campus opened a medical school in 2013 and has reached the heart of the Coachella Valley by way of the UCR Palm Desert Center. The campus has an annual statewide economic impact of more than $1 billion.

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