Anderson forecasts slow recession recovery

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By Robert Salonga
Daily Bruin Staff

The UCLA Anderson Economic Forecast predicted Wednesday that the
national economy will emerge from recession at a sluggish pace and
has a good chance of tumbling back into a downturn, and the local
entertainment industry may have taken a permanent hit.

The Los Angeles economy has fallen victim to
“outsourcing” from the city’s dominant film
sector. Dubbed one of L.A.’s most important industries, movie
production is moving away from the area toward cheaper out-of-state
locations including Canada.

Anderson School senior economist Christopher Thornberg said in a
presentation that motion pictures have recently become a weakness
in the L.A. industrial economy, with a decrease of 17,300 employees
from February 2001 to February 2002. Before that, the average
annual decrease from 1998 to 2001 was 2,233 employees.

Thornberg said the entertainment slump is largely due to the
threat of strikes by the Screen Actors Guild and the Writers Guild
of America ““ which temporarily slowed activity ““
coupled with technology and cost factors driving movie production
out of the area.

  BRIDGET O’BRIEN/Daily Bruin Senior Staff As part of the
Anderson Forecast on March 27, guest speakers from the
entertainment industry (l-r) Mark Ordesky, moderator John Rabe,
Brad Pomerance and Cody Cluff discuss the state of the movies in
L.A.

He added that the number of film production jobs in L.A. may
never fully recover.

Edward Leamer, director of the forecast, said in a statement
that the national economy faces a similarly bleak future.

Usually economies are boosted out of recession with help from an
increase in consumer spending, Leamer said. But consumer spending
remained constant through the recession, leaving forecasters to
find no driving power to sustained economic recovery.

The current economic condition will only improve considerably
with an increase in business investment, Leamer said, but that
it’s not likely to happen in the next few years.

“Business investment in pursuit of technological
innovations has long waves that last a decade or more ““ a
peak in 1980 and another in 2000. It is highly unlikely that there
will be a sharp recovery of business investment in the next year or
two,” Leamer said.

The UCLA forecast is one of the most accurate and widely
followed economic barometers in the country. UCLA predicted the
2001 downturn long before other forecasts did.

With reports from Kelly Rayburn, Daily Bruin Senior Staff.