January 14th, 2010 10:42 AM by Lehel S.
LA MIRADA - The recession that plagued the region for two years ended last last year -- September to be exact -- but unlike past downturns, the national and regional economy won't come roaring back.
It will be more like a meow, economist Esmael Adibi told his audience of about 200 business owners and leaders Tuesday who came to the Holiday Inn Select to hear his outlook for the year.
"A recovery is in place, but not a typical one," said Adibi, director of the A. Gary Anderson Center for Economic Research at Chapman University.
That's because in past recessions, the housing market fueled a resurgence in the region, providing jobs for construction workers, things to sell for furniture-makers, things to haul for truckers and property to refinance for homeowners.
But construction will remain weak this year, reflecting a market that should see median home values slowly rise by about 4.5 percent in L.A. County and 5.5 percent in Orange County, Adibi said.
It won't be until the second half of the year when the economy starts kicking into gear, Adibi said.
That's because at varying degrees of success and speed, the mix of federal stimulus money and low interest rates are beginning to circulate through the economy. That, coupled with signs that consumers are spending again, and that businesses have sold off their inventories, and an improving national trade balance, are making a difference, Adibi said.
That difference will show in a weak-but-welcomed 2.4 percent increase in the gross domestic product, Adibi said.
It's all cause for cautious optimism, he added.
But Adibi, who offers his forecast each year, tempered that optimism with concerns about the regional commercial market, jobs, the dwindling of manufacturing, California's $21 billion deficit and the nation's ballooning debt.
"Don't be surprised to see a stubborn unemployment rate this year," Adibi said, adding that jobs are among the last of economic indicators to improve in a recovery.
As it stands, Whittier's unemployment is nearly 10 percent, and some areas of the San Gabriel Valley have hit 15 percent.
Such high numbers will likely continue until business owners are convinced that a recovery is for real, Adibi said. Often, hiring doesn't come until several quarters after a recession, he said.
But what also doesn't come back immediately is the commercial property market - industrial and office buildings. As firms shed jobs, they have less workers, so until they hire more they won't need space, Adibi said.
It may be 2012 until the non-residential market hits a bottom, he said, adding that millions of square feet of space has come on the market as rents have have gone down.
Still, even with his concerns about the direction of public policy - including the effect on business of health care reform - Adibi's picture for 2010 leaned positive.
Business owners were inspired by the encouraging morsels in the forecast, but their concern reflected Adibi's.
"It's encouraging, on one hand, to see that you will have an uptick in business," said Melissa Baron, co-owner Commerce-based BW Enterprises, which sales wholesale mattress components. "But it's depressing to hear that the value of our (commercial) space is a lot less than what would make us happy."
Still, co-owner Bob Wallace said the firm is thinking about renting some of its light-manufacturing space. It's similar space that Richard J. McGeagh is seeing more use of in recent months.
It's perhaps a good sign after what Adibi called "the nastiest recession yet."