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Friday, May 14, 2004
Long Beach Press-Telegram 5-14-04
Editorial: A favorable outlook
Thursday, May 13, 2004 - If you scour the latest Cal State Long Beach Regional Economic Forecast for bad news, the worst you'll find is that raging residential prices will cool down in a year or so. We can live with that.
In fact, with all due deference to property owners who can hardly believe their good fortune, some moderation would be welcome. Housing prices can't go on appreciating at 20 percent a year, as Lisa Grobar, the forecast co-author, put it.
There is one other cautionary note in the annual regional forecast: Next month's meeting of the Federal Reserve Board might bring a quarter- point rise in short-term interest rates as an antidote to stirrings of inflation. That definitely would calm the housing market.
Otherwise, things are looking good for the economy of Long Beach and the region. There should be moderate growth in employment, retail sales, and tourism-related activity. And Long Beach should do somewhat better than the rest of L.A. County and the region.
Grobar and the chief author of the forecast, Joe Magaddino, chairman of CSULB's Economics Department, believe the region is in an era of accelerating economic growth. For the city of Long Beach and state government, both struggling to get out from under crippling deficits, the timing is helpful. Tax revenues are increasing.
Timing is especially helpful for downtown Long Beach, which has several thousand upscale housing units coming on line, as well as the new waterfront retail-restaurant development known as the Pike at Rainbow Harbor. Condominiums are selling well at substantially higher prices than last year; lofts in some cases have waiting lists of would-be buyers, and apartments appear to be renting well.
Throughout Southern California, however, housing supply is pathetically outstripped by demand, which puts enormous pressure on prices. Lucky owners. But the downside is that more and more people are being priced out of the market. In Orange County, fewer than a fourth of the populace can afford to buy a median-priced house, and the situation in the Long Beach area is not much better.
Still, those are problems of prosperity. And something similar can be said about employment. Granted, some of the veterans of the dot-com collapse still search for comparable compensation, and some people worry about the exportation of low-skill jobs. But those are the trade-offs in an immensely powerful and dynamic economy whose strengths are in innovation, high technology and entrepreneurship.
We can live with that, too.
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