06:37 PM PDT on Friday, August 5, 2011
By JACK KATZANEK
Talk about whether the country could be facing a second recession has many in Inland Southern California worried, especially because the effects of the first one never went away.
Events and trends centered thousands of miles from Riverside and San Bernardino counties have been slowing economic recovery all year. Several months ago it was the earthquake and tsunami in Japan and the spiraling price of fuel. This summer it has been the rhetoric surrounding the federal debt, crippled European economies and a huge sell-off Thursday on Wall Street.
All of these events make people nervous enough not to spend, which is the last thing the Inland economy needs right now, economists say.
Also, the timing of events in European capitals, on Wall Street and in Washington could not be worse. August is when retailers start to make orders for the goods they hope to sell when the holiday season gets close, and it’s when shipping companies start to move these goods.
People in the Inland area are watching closely, because the only noticeable boost in job growth seen this year is in the industries that move consumer items. According to the latest report from the state Employment Development Department, about 3,400 jobs have been added in those sectors, representing about 40 percent of all job growth.
Redlands-based economist John Husing said this has become critical to the Inland region’s job market, especially because local and state budget cuts have cost thousands of Inland workers their public-sector paychecks. Also, the construction industry, which put bread on more than 127,000 Inland tables during the good years, is still not hiring.
The danger, Husing said, is that shoppers get worried when they read about the possibility of a government in default and a stock market that loses 500 points in a day.
“The talk has scared people, and I think one thing we can’t do is add fear,” Husing said. “In the real world, people who are scared spend less. They sit on their cash.”
Mark Schniepp, principal of Goleta-based California Economic Forecast, said a double-dip recession was a possibility, but he considers it improbable right now. Schniepp noted that there have been weak economic reports in the last few weeks but said it was worth noting that Thursday’s Thomson Reuters’ study on July retail sales showed improvement.
“We’re not at the point we were at in 2008. We’re not seeing that kind of trauma,” said Schniepp, recalling the Wall Street meltdown in the late summer and fall of that year. “It would be premature to worry that much.”
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