While the evidence remains fragmentary, there are signs that L.A.’s overall economy will be able to weather the recession better than many other regions of the country.

Newly revised projections by Economy.com, a West Chester, Pa.-based economic forecasting firm, shows that L.A. County payroll employment contracted 0.6 percent (6,200 jobs) in the third quarter ended Sept. 30. That’s only slightly higher than the 0.4 percent forecast before the Sept. 11 terrorist attack.

What’s more, Economy.com projects that L.A.’s growth rate between the second quarter of 2001 and the second quarter of 2002 will be 0.34 percent slow but better than projections for New York (-0.70 percent), Chicago (-0.02 percent) and San Francisco (-0.36 percent). Cities showing growth rates over 1 percent include Washington, Houston and Dallas.

“One of the nice things about Los Angeles is that it has had a very moderately growing economy, slow and steady,” said Steven Cochrane, senior economist at Economy.com. “There are so few imbalances no bubble in the housing market, no huge surge in income growth.”

Positive growth?

Even so, the rest of the year is likely to be bad. County payroll employment in the fourth quarter is projected to decline at an annualized rate of 2.8 percent, adjusted down from a 0.1 percent increase before the Sept. 11 attacks. The revision lowers the number of county jobs by 32,000.

Further contraction is expected for the first quarter of 2002, followed by a resumption of growth in the second quarter, according to Economy.com a projection generally in line with other forecasts.

“It will be easier for L.A. to move back into a growth mode because it doesn’t have any real problems of oversupply,” Cochrane said. “Once the demand side of the economy picks back up again, the overall growth will accelerate fairly quickly.”

Economists hasten to point out that the current downturn is especially difficult to decipher because there is so much uncertainty over the prospect of U.S. military action and with it, more terrorist attacks. Any event that even approaches what happened on Sept. 11 could easily upend an already jittery consumer mood.

Adding to the difficulty is that little or no hard data has been available on the L.A. economy post-Sept. 11. Even the local and state unemployment data for September, due out Oct. 12, will not be conclusive because the numbers are based on a survey that asked respondents if they worked on any day for the week ended Sept. 12.

“We won’t have a clear picture of how the Sept. 11 attacks are affecting local employment until the October numbers come out in November,” said Ted Gibson, chief economist at the California Department of Finance.

He added that he “wouldn’t be surprised” if September’s L.A. County unemployment rate turned out to be somewhat lower than the 5.6 percent rate for August.

Returning to normal

To date, what’s been reported involves a hodge-podge of economic snapshots, much of it contradictory, that offers more confusion than clarity about what’s going on in L.A. There is general agreement that the economy went into a near free-fall in the immediate aftermath of the attacks, but that in the past couple of weeks consumers are slowly returning to restaurants, auto showrooms and stores (especially value-oriented ones that sell everyday basics). How significant this pick-up in activity might be is subject to debate.

The Big Three U.S. automakers last week reported selling 1.3 million cars and light trucks in September, down 8.7 percent from the year-ago month but not as bad as they had anticipated. The reason: Consumers seem to be responding to interest-free deals.

Similarly, middle-income consumers appear to be going after low mortgage rates, with local Realtors reporting that the volume of home shoppers remains robust at moderately priced open houses.

For now, the local economic damage has been relatively limited centered largely on the travel and hospitality industries that generally employ lower-income workers.

“Our business was cut in half right after the attack and has stayed down ever since,” said Cameron Jimenez, office manager of the Pacific Dining Car, a restaurant popular with downtown business and political leaders. “We saw a little increase in business when Madonna had her concert at Staples Center and for USC’s (football) game, but that’s been about it.”

What economists will be watching in the coming weeks are signs that these service-oriented jobs could lead to retrenchment in other industries including higher-wage jobs that were hard hit during the area’s last recession in the early 1990s.

“If there is another terrorist attack on U.S. soil or a serious setback militarily that causes the nation to enter into this bunker mentality where nobody spends, then we could see a recession lasting all the way through next year,” said Cochrane.