LOS ANGELES (April 18, 10:10 a.m. EDT) — The glittering commercial hub of Los Angeles might be flickering on low flame for awhile.
And that has nothing to do with the electricity crisis now spreading across the state of California.
Los Angeles, the nation's second-largest city, faces an economic slump after nearly a decade of relatively rapid growth, said Jack Kyser, chief economist with the Los Angeles County Economic Development Corp.
A number of factors are aligning to bring down the economy, said Kyser, an April 11 luncheon speaker at Plastics Encounter, a Plastics News-sponsored trade show and conference in Los Angeles.
Not the least of those concerns is the burst of the Internet bubble and layoffs by many of the area's top companies.
"We're going to suffer a velocity shock," Kyser said. "I expect little or no growth in the economy, after it has climbed upward before. The year 2000 was supposed to have the Y2K problem, but for Southern California, the economic downturn could be the real Y2K for us."
That does not bode well for the plastics industry. Los Angeles County has the most plastics processing employees in the United States, and about 500 processing establishments, according to figures from the Washington-based Society of the Plastics Industry Inc.'s 2000 Economic Report.
In addition to problems in the technology sector, old-line companies including Lockheed Martin Corp., Southern Pacific Rail Corp. and Times Mirror Co. have announced layoffs, creating a recipe for slower growth, Kyser said.
The region typically has enjoyed low nonfarm unemployment, currently running at 2.6 percent this year, Kyser said. But the recently announced layoffs should mean a huge spike to those figures, he added.
The ongoing power crisis — with rolling blackouts expected this summer — does not add to the region's luster or help to attract new employers, Kyser said.
Still, while an expected strike in the entertainment industry this summer could cripple Hollywood production and add to the unemployment rolls, it also would help ease the energy crunch, he said.
"We have enough bad movies to last the rest of the year, even with a strike," Kyser said.
While the economy will slow, the news should not be disastrous for the region. The recession should be mild and might last only this year before a slight rebound comes, he said.
"You have to plan ahead," Kyser said. "The economy might be in for moderate pain this year. You'll have to stack up on your painkiller of choice."