Economist forecasts few problems in coming year

GLENDALE — The economy's slight deceleration is no cause for alarm, but the city's empty office space may be a sign of a weak economy, said Jack Kyser, senior vice president and chief economist for the Los Angeles Economic Development Corp. Thursday.

Members of the business community, city and school officials gathered at the Hilton Glendale for the Glendale Chamber of Commerce's Economic Outlook 2007 breakfast.

"It's to update local businesses on the local and regional economy, providing another benefit for chamber members," chamber Executive Director Judee Kendall said.

About 240 people listened to Kyser's address on the coming year. His key points were that a slowing housing market and retiring baby boomers may put some stress on the economy. But Southern California's low unemployment, increase in scientific and technical services and steady performance in other sectors means there will be few problems in the upcoming year.

"Yes we are slowing down, but we are slowing down from a very, very high level," Kyser said. "This is very important to understand."

Kyser's forecast for 2007 covered major trends in the national, state and Los Angeles County economies — topics of much importance for administrators and business people in Glendale.

"We're not in a vacuum here," Mayor Dave Weaver said. "What happens in the county is happening here and vice versa."

One of Glendale's major economic concerns is the high commercial vacancy rate, Weaver said.

"Our vacancy rate downtown is the highest in the county," Weaver said. "But it's a transitional thing…. I kind of feel like people bought something in commercial buildings at artificially high prices and they're trying to get an artificially high lease. But people say, 'What's wrong with Glendale?' There's nothing. It's a good place. I think a year or two out our vacancy rate will drop tremendously."

But the amount of empty space is an indicator to an area's economic robustness, Kyser said.

"The lower the vacancy rate, the stronger the market," Kyser said.

One major item left out of Kyser's address was the war in Iraq. Congress has approved $70 billion for the war in Iraq for the 2007 fiscal year and the president is expected to ask Congress of $100 billion more, reports say. In the beginning of January, the president announced a new plan which includes sending an additional 21,500 U.S. troops to Iraq.

"The war is having a big impact on the U.S. economy in terms of the amount of money it's costing," Kyser said. "And it's causing some stringencies in Washington, D.C. But because of the way the world is, we think that probably defense spending is going to be strong for several years more. And that has positive implications for the Southern California economy."