A new report says California is recovering from the economic slowdown that has affected the United States over the past year. However, the West Coast state is still suffering from a downturn in its high technology sector.
Analyst Jack Kyser says there is little good news for the high tech communities of the San Francisco Bay. Mr. Kyser is chief economist at the Economic Development Corporation of Los Angeles, which released its projections Monday, September 16. The organization's report is gloomy about prospects for Northern California.
"You're dealing with the tech and dot-com crash," he said. "Their tourism industry, of course, was badly hurt by the September 11 attack, and they're very dependent on people flying in. And they had a real estate bubble, so they have a lot of office and industrial space that's sitting unoccupied."
Mr. Kyser says Southern California, on the other hand, has all but escaped the recession that has affected the rest of the country. Although Los Angeles suffered slowdowns in tourism and movie production, it was helped by growth in smaller regional cities like San Diego.
Mr. Kyser says California, the most populous U.S. state, with more than 34 million people, is crucial to the recovery of the United States.
"For example, the auto industry, you want a healthy California economy, because we're so car-crazed," he said. "And then, of course, we use a lot of consumer goods, apparel, all types of things. So it's very, very important that the state of California is healthy."
The analyst says imports have rebounded, boosting revenues at the Los Angeles port. He adds that newly awarded defense contracts should bring jobs to the city next year.
"There are still a lot of things going on in the California economy," he said. "What people don't understand is the diversity. When some industries are struggling, others will be doing o.k."
Revised data from the Organization for Economic Cooperation and Development show that California has dropped from fifth to sixth place in the international ranking of economies. The state now lags behind France, but ahead of Italy. And the Los Angeles region, on its own, has an economy equal to Spain's, the tenth largest economy in the world.
Mr. Kyser says one long-term problem could affect the rosy outlook for the West Coast U.S. state - a $24 billion debt, left over from California's energy crisis.