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State's Economy Slowing, but Outlook Not as Dismal Here as Elsewhere

LOS ANGELES-California won't totally escape the economic slowdown that is gripping the nation, but it's not likely to hurt much or for long, according to three of the state's leading economists.

By Patricia L. Kirk | Updated on January 20, 2001

LOS ANGELES-California won’t escape the predicted recession already noticeable in some areas of the nation, but the economic slowdown here should be relatively mild and won’t last very long–six to nine months, according to three of the state’s leading economists, who presented at Real Estate Conference Group’s Real Estate 2001 conference on Friday.

Noting that the Federal Reserve has already cut the interest rate by 50 base points and will likely to do it again the end of this month, Donald H. Straszheim, president of the Milken Institute, said, “There’s nothing better for equity than a rate cut. When rates come down, equities do better; it’s a good time to invest.” He also predicts a tax cut under the new administration, but “it will be political, not an economic decision,” he warns, noting that a tax cut will have little immediate effect on the economy.

“One thing about California that’s astounding is at year end the economy was still booming,” added Brad Williams, senior economist for the California Legislative Analyst’s Office. “As we look ahead, one of the hallmarks is lack of real estate, so there’s still pressure. We’re still seeing prices increase due to excess demand, so prices will hold up better than during the last two economic turndowns,” he said.

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