Economic rebound in Southern California?

Although the local economy in Southern California still seems dismal, according to various economic indices, it may finally be on the mend. From an L.A. Times story:

Signs are increasing that an economic turnaround has begun in Southern California, even as residents and businesses continue to struggle in the worst downturn in decades.

The state's exports are growing as overseas consumers, especially those in Asia, are demanding computers, electronics and agricultural products from California. Tourists are starting to return to the region's hotels and beaches. And home prices appear to be stabilizing in some of the Southland's hardest-hit markets...

In California, a new report by Comerica Bank showed positive trends in the state's economy in July, for a fourth straight month. Cal State Fullerton says its indicator for Southland economic growth was positive last month for the first time in nine quarters.

Economists are also optimistic about California's long-term prospects in areas such as green technology, medical research and international trade. In the short term, however, its rebound could lag behind the national recovery.

The state's unemployment rate reached 11.9% in July, well above the national rate of 9.4%. Joblessness in California will continue to rise through the end of 2009, peaking in the fourth quarter at 12.2%, according to UCLA economists, who predict that job growth won't resume until late 2010.

The state's budget woes also will be a major drag. California is spending less on healthcare, education and prisons. It's cutting jobs and furloughing workers. That means less money to stimulate the economy.

The state's recovery will also be hindered by its historic reliance on the housing industry, which created tens of thousands of jobs in construction and financial services during the boom. Now many of those positions have vanished...

Southern California home sales were up 11% in August from a year earlier, while median prices rose for the fourth straight month to $275,000, up from a bottom of $247,000 in April, according to figures released by MDA DataQuick. Housing prices are unlikely to take another big tumble, Comerica economist Dana Johnson said. "The housing sector seems to have made the huge adjustment it needed to make," he said. "It doesn't look like there's terrible further adjustments to follow."

Builders are working through their inventories of unsold homes, which means they'll soon have to start building again, said Nancy Sidhu, chief economist for the L.A. County Economic Development Corp.

Still, a surge in foreclosures could hamper the state's housing recovery. In July, about 1 in 10 Californians with a home loan was in default, according to First American CoreLogic. It's another reason economists predict the state's comeback won't be a quick one...

The long-term prognosis for California, however, is optimistic, said Nickelsburg of the Anderson Forecast. The state will benefit from federal stimulus money now being channeled into research in medical innovation and green technology. Beyond 2010, Nickelsburg said, California could grow faster than the rest of the country.

Fledgling industries such as battery technology, wind power and the computerization of medical records could propel new growth in the state, said Levy of the Center for Continuing Study of the California Economy.

California already leads the nation in patent registration for green technology, according to Next 10, a nonprofit research group in Palo Alto. And it attracted a record investment in renewable energy and clean technology last year, despite the state's deep downturn.

Throughout the recession, the health and education sectors have been immune to widespread job losses, and those sectors will probably continue to generate growth, economists said.

As people reach retirement age, they'll be drawn to the weather and lifestyle of California, coming here for healthcare, said economist Sung Won Sohn of Cal State Channel Islands in Camarillo.