"The housing industry will continue to slide in terms of prices and unit sales of both new and existing units," said Jack Kyser, the LAEDC’s Chief Economist. "The most distress will be in the Riverside-San Bernardino area and Orange County, with the latter actually in a "spot" recession, as measured by employment, during the first half of 2008."

The slow-growth scenario has financial implications for state, county, and city governments. Budgets at all three levels will remain stressed, due to the housing slide and declines in taxable retail sales. The LAEDC looks for slower government employment growth over the forecast time frame.

"There is some good news in the 2008-2009 economic outlook," Kyser said. "The region’s tourism industry should see nice growth trends during the time frame, thanks to a declining U.S. dollar, an agreement between the U.S. and China allowing more leisure travel to U.S., and a lengthy roster of ‘events’ that will keep Southern California in the national and international spotlight."

The Forecast also looks for a slight pickup in international trade in 2008, with the number of containers handled at the Los Angeles/Long Beach port complex up by 2.8 percent compared with the 0.6 percent decline in 2007.

"Support for the region’s economy will also come from public works projects like the Gold Line extension and the Exposition Boulevard light rail line," Kyser noted. He added that there is also significant private investment underway.

On the web: www.laedc.org