For Los Angeles businesses battered by the financial crisis and the recession, 2009 already is shaping up as a year they want to fast-forward through.

Job losses, business failures and real estate-related defaults in Los Angeles are all expected to continue into the new year. And few industries are likely to escape unscathed.

“It’s a scary time,” said Jan Rutkin, president of Todd Rutkin Inc., a garment industry contractor located south of downtown that slashed one-third of its work force of about 75 employees in the last two months.

The hits to the local economy are expected to be most severe during the first half of 2009 as the national economy goes through a contraction, the credit crunch continues and the huge real estate debt overhang plays itself out. But there’s more uncertainty about whether the economy will bottom out midyear and begin a slow recovery or whether the malaise will spill over into 2010.

Much will depend on how quickly consumer confidence rebounds, and whether and when billions of dollars in expected federal stimulus funds hit the streets in Los Angeles.

“A lot of this hinges on the size and diversification of the stimulus package that comes out of Washington and also the speed which the money flows to local government agencies and individuals,” said Esmael Adibi, director of the Anderson Center for Economic Research at Chapman University in Orange.

One wild card will be California’s massive budget crisis and looming cash crunch. Already last week, the state put nearly $4 billion worth of infrastructure projects on hold as it was unable to get investor interest in bonds because of the budget crisis. If the stoppage persists for months and other projects get backed up, it could push the start of the recovery into 2010.

One thing nearly everyone agrees on is that any government boost won’t come soon enough to help tens of thousands of business owners in L.A. County now struggling just to keep afloat.

“It will be a fight next year to even come close to this year’s sales,” said Caren Leib, owner of Siany, a women’s accessory boutique with stores in Calabasas and Westlake Village. “We’re trying desperately to keep our staffing level the same. We’re doing the best we can to survive.”

This is quite a different scenario from the start of 2008. At that time, the prevailing view was that while the housing, construction and finance sectors were going through a severe correction that began with a wave of delinquencies and foreclosures tied to subprime home loans, the rest of the local economy would muddle through what was looking like a mild recession.

Credit freeze

But then came September and a stalling of the financial markets that began with the failure of Lehman Brothers.

“It’s really a tale of two years,” said Christopher Lewis, partner in the West Los Angeles-based private equity firm Riordan Lewis & Haden. “Up through August, things were moving. Deals were getting done and businesses were able to get financing. Then, when the financial markets seized up in September, things really went off a cliff.”

Panicked consumers, already reeling from soaring gas prices, pulled back on their spending. Businesses weren’t able to get loans and were seeing existing lines of credit pulled. Financing stalled for major development projects. Trade flows plummeted, hurting the region’s extensive logistics industry.

By October, job losses were soaring. L.A. County’s unemployment rate, which had been rising steadily toward 7 percent through most of the year, suddenly shot up past 8 percent, its highest level since the dark days of the early 1990s.

This recession is also sweeping much of the globe. One sign of this: In the past 90 days, exports have plunged at the ports of Long Beach and Los Angeles. At the Port of Long Beach, exports are down 18 percent in October and November from year-ago levels.

“Imports have been extremely soft for quite a while, but now exports are softening dramatically as well,” said Robert Krieger, president of Norman Krieger Inc., an international freight forwarder and customs broker based in Rancho Dominguez. “We’re planning on exports continuing to soften well into next year.”

Indeed, the global scope of this recession is what distinguishes it from other recent downturns and is a major reason why economists and key industry players believe 2009 will be a dismal year for Los Angeles. By contrast, the recession of the early 1990s lifted when the booming global economy caused international trade to become a major local economic driver.

“There’s no quick turnaround in store on the trade front,” said Jack Kyser, chief economist with the Los Angeles County Economic Development Corp. “That depends on the economies of our major trading partners, and they may take even longer to turn around than our economy will.”

Besides hitting the region’s sizable logistics industry, the plunge in exports has hurt local manufacturers and is a major reason behind the 2 percent drop in manufacturing jobs in the last year.

Manufacturers have also been hit hard by a steep drop in consumer demand for everything from cars to furniture to roller skates.

Indeed, at South Gate roller-skate manufacturer Sure-Grip International, president Jim Ball said his work force has been cut about 20 percent in the last six months as demand for roller skates has fallen.

“People still want to roller skate, but more are renting now instead of buying their own. And when they do buy, they’re buying cheaper models,” he said.

Entertainment

Troubles are also looming in the entertainment sector. In recent months, financing for productions has slowed substantially.

“There’s a whole range of mechanisms for film financing and almost all of them are facing difficulties right now,” said Jonathan Handel, an entertainment attorney with Century City-based TroyGould PC who also posts an industry Web log. “Many banks and hedge funds have withdrawn from the film financing market, and there are questions about whether state-incentive tax programs in other states will continue.”

Handel believes that without the incentives, instead of filming in California, some productions will just be canceled.

And then there’s the possibility of an actors’ strike next month should contract talks between the Screen Actors Guild and the Alliance of Motion Picture and Television Producers fail to produce an agreement. However, that prospect appeared to recede somewhat last week as significant opposition emerged within the guild, making it more difficult to reach the 75 percent strike authorization threshold.

Another big drag on the local economy in the last two months has been the slowdown of consumer spending. And that has slammed local retailers hard, forcing layoffs, store closings and consolidations. It hasn’t helped that Los Angeles has long had what some economists say is an overabundance of retail outlets.

According to the state Employment Development Department, L.A. County’s retail sector lost 13,000 jobs between October 2007 and October 2008, a drop of 3 percent.

A couple of months ago, a wave of liquidations swept through the industry, including Mervyn’s, Linens-N-Things and Shoe Pavilion. Some industry experts are predicting another round of retailer liquidations after the new year, once holiday sales are tallied up. One key is the extent to which retailers have had to discount their products to move them off store shelves.

To date, the impact on local malls has been limited, since the chains Forever 21 and Kohl’s agreed to move into the now-closed Mervyn’s stores. But if liquidations mount next year, mall owners will feel the pinch, especially those with high levels of debt. Already, the nation’s second largest mall owner, General Growth Properties, the Chicago-based owner of the Glendale Galleria, is trying to renegotiate its debt payments to avert bankruptcy.

Office troubles

Then there’s the office property market.

A year ago, that market was thought to be immune to the problems plaguing the housing market. After all, vacancy rates, though rising, have remained relatively low. But that’s expected to change in 2009 as companies in a wide array of professional service and other industries downsize their space requirements.

“When tenants renew, they are renewing for less square footage. We’re seeing a steady stream of sublease space come on the market,” said Frank Campbell, managing director for the Los Angeles region for Chicago-based Equity Office Properties.

In essence, the commercial property market is seeing its own bubble burst, hurting property owners who took on massive debt to acquire portfolios at the height of the boom. Maguire Properties Inc., downtown L.A.’s biggest landlord, is a prime example. It purchased a $3 billion portfolio of Orange County office properties that has been devastated by closures of mortgage finance company tenants.

Also, brokerages and other commercial real estate services firms have seen their revenues plunge, forcing them to lay off brokers, shutter offices or even close down altogether. Los Angeles-based CB Richard Ellis Group Inc., the world’s largest such company, recently eliminated 1,100 positions.

That means an industry that has been a growth driver for the L.A. economy for years will be fighting to recover. But, of course, there is a flip side: lower rents for all types of L.A. businesses, which should leave more cash for saving jobs and reinvesting in core functions.

As for the housing sector, where the problems of this downturn started, there’s concern about a second wave of foreclosures next year as interest rates reset on so-called Alt-A and adjustable rate mortgages. Add to that a more traditional cause of foreclosures: increasing numbers of people being thrown out of work.

“No one quite knows how big this next wave will be. It’s a big wild card,” said Lisa Grobar, professor of economics at California State University Long Beach. She added that this was a big reason why financial lenders that bought up securitized mortgages are still on shaky ground.

Whatever the case, there’s a consensus that median housing prices have another 15 percent to 20 percent to fall before hitting bottom in L.A. County sometime late next year.

But already there’s a glimmer of hope. Home sales have risen by double digits compared with year-ago levels. While much of that is because of distressed sales now, by the end of 2009, home prices are expected to be low enough to start luring buyers back in for all types of properties.

“The market is working this out. Prices got way out of whack, they fell and are continuing to fall and, eventually, they reach a level where people start buying again,” said Christopher Thornberg, principal with Beacon Economics. “Look, once a property gets to $200,000, then almost anyone with a job can raise $20,000 for that 10 percent down payment.”

So what does this all mean for the local economy?

It may hit bottom in late 2009 or early 2010, but unemployment, generally a lagging economic indicator, is expected to remain above 8 percent well into 2010 and possibly into 2011.

And it may take even longer until people actually feel they are on solid economic footing again.

“We may not feel a recovery until the 2011/2012 time frame,” said Henry Walker, chief executive of Farmers and Merchants Bank in Long Beach. “It could take that long for people to adjust to all the financial drama going on in their lives right now.”