War, a weakening U.S. dollar, a flailing stock market, SARS and soaring home prices have failed to dampen the region's economic outlook, a pair of economists said Thursday.
But the recovery won't be quick, warned Joe Magaddino, chair of the economic department at Cal State Long Beach and director of the university's Office of Economic Research.

The war in Iraq effectively stalled the economy, curbing business and consumer spending and putting the country's economy in a "soft spot,' he said. "This has put us between Iraq and a hard place.'

The guardedly optimistic forecast, presented at the Long Beach Marriott Hotel near the airport, included these predictions for Los Angeles, Orange, Riverside, San Bernardino and Ventura counties:

Job creation will be sluggish, with only 0.6 percent growth in 2003 and 1.8 percent in 2004.

Economic growth will start to show significant improvement by early 2004.

Service jobs, including those in tourism, will grow by 1.8 percent in 2003 and 2.4 percent in 2004.

Retail employment should increase by 1.5 percent in both 2003 and 2004.

Manufacturing will continue its decline, with more job losses through 2003, but there will be growth in 2004 with the help of an expected increase in defense expenditures.

Taxable sales will grow at 5.8 percent in 2003 and 6.4 percent in 2004,

Riverside and San Bernardino were the only counties in the region to see economic growth in 2002, with an employment gain of 2.7 percent. Their job growth will accelerate to 3.3 percent in 2004, the report said.

Aside from the lag in employment, the overall economic forecast was upbeat.

"Each of the counties will see a significant improvement in 2004,' said Lisa Grobar, director of the project and associate director of the Office of Economic Research.

Trade continues to show promise, with expansion of both the Los Angeles and Long Beach ports, the report showed.

"Even in a bad year, these ports saw some growth,' Magaddino said.

The ports funnel in and out about one-third of all the nation's shipped goods. But port expansion could become a liability to the region unless infrastructure improvements are made soon, Magaddino said.

"They're not going to be able to do it well unless you expand the (Long Beach) 710 Freeway,' he said, referring to ongoing discussions about widening or enhancing the main artery from the port.

The report also offered a strong outlook for area tourism, particularly in Long Beach.

"We think that the tourism market will improve,' Magaddino said. "But we have what I call the Joe Prevratil problem.'

Magaddino was referring to successful efforts by the Queen Mary's president and chief executive officer to have a cruise ship terminal built in the Port of Long Beach.

Carnival Cruise Corp.'s terminal, which opened last month, is expected to bring 500,000 passengers a year, generating hundreds of millions of dollars in economic impact. Such potential makes it difficult for economists to forecast tourism for the upcoming year.

Magaddino cautioned that tourism could be hurt by fears of severe acute respiratory syndrome, or SARS, but he said it's unlikely to significantly affect local travel.

The strong tourism outlook drew a smile from Steve Goodling, president and chief executive officer of the Long Beach Area Convention & Visitors Bureau.

When war with Iraq broke out, Goodling said conventions were reporting declines of up to 30 percent in attendance. But recently Goodling has been seeing a return in corporate interest, with more firms discussing plans to host meetings in the area.

"We're bidding on one large corporate meeting right now,' he said.

That meeting, an annual gathering held by Sir Speedy PIP, would generate an economic impact of roughly $1million, Goodling said.

ONLINE EXTRA: www.csulbforecast.com