West Coast recovery builds on lumber industry's gains
Like green asparagus tips breaking through the soil in the fields of California's San Joaquin Valley, signs of economic recovery are popping up in the Western United States.
However, economists say this ''greening'' of the region's business and employment scene is uneven and to a great extent depends on continued relatively low interest rates.
Research economist Yvonne Levy of the Federal Reserve Bank of San Francisco says, ''There's no doubt that recovery in the West got started'' in the first quarter of 1983. The most dramatic improvement, she points out, has been in the ''interest rate-sensitive'' economies of Oregon and Washington, major producers of wood products for the rebounding housing industry.
At the same time, according to Ms. Levy and other economists, California - which dominates the Western economic landscape - has experienced ''sluggish'' growth so far this year, with mixed indicators.
Unemployment in California was 11.2 percent in February, dropped to 9.8 percent in April, pushed back up to 10.5 percent in May, and declined slightly to 10.3 in June. Recent impressive growth in construction and more modest upturns in the food-processing, furniture, lumber, machinery, and chemical industries have been offset to some extent by continued layoffs by aerospace companies.
The sheer size and diversity that make California's economy a national bellwether also cause it to respond more slowly than some other industrial states to the current recovery, the economists say. Weak overseas demand for US agricultural products continues to hurt some segments of the state's great Central Valley farming industry. And California's big high-technology sector has yet to feel the rising national economic tide.
With residential and business construction leading the recovery, the Western Wood Products Association reported lumber production in Western states at ''99 percent of normal'' on June 30.
That was particularly good news for Oregon, the region's top state in forest products - and the state most dependent on that industry. But while employment in the state's lumber and wood-products industry was up by 1,300 workers in May and unemployment continued a steady decline, Oregon economists noted that the May gain was ''200 less than seasonally expected'' and added, ''The fact that employment has been on the upswing does not mean that jobs are plentiful.''
Some laid-off workers, said the Oregon Employment Division's report on labor trends, ''will never be recalled as some businesses have permanently reduced their work force or closed their doors. Employers will likely be slower to increase their labor force than in past recoveries as there is a lot of concern about its (the current recovery's) longevity.''
Nevertheless, Oregon economists say the prospect is ''encouraging'' and ''the 1983 recovery is beginning to show some strength.''
In Washington, the resurgence of the lumber mills has been offset somewhat by sluggishness in the aerospace, machinery, truck manufacture, and shipbuilding industries. Employment at Boeing Aircraft Company, which laid off some 10,000 workers in 1982, continued to shrink in the first half of 1983.
The intermountain states appear to have less reason for optimism than others in the West. Arizona, Colorado, Idaho, and Utah have benefited little from the recovery because they depend heavily on mining and/or agriculture. Arizona and Utah have benefited somewhat from increased defense spending.
In Nevada, the gambling industry, which slumped in 1982, has made a strong recovery this spring and summer, economists report.
Prospects appear good in the two most remote states, Alaska and Hawaii.
Federal Reserve economists report that despite a slight drop in the number of people employed and a decline in revenue from North Slope oil, ''Alaska was immune from recession last year and appears to remain healthy.''
A revival of the tourism industry in the last quarter of 1982 put Hawaii on the path to recovery earlier than most other states. Its unemployment rate, just over 6 percent, is the lowest in the West. New jobs continue to be created, economists say, despite the fact that the pineapple and sugar industries have been hit by price drops in the world market.
Looking farther into the future, economists at the regional Federal Reserve office in San Francisco point out that continued migration of people from other regions of the US indicates confidence in ''the future vitality of the region.'' They say there is ''considerable basis'' for this attitude.
With ''a disproportionate share of the nation's agricultural capacity, much of its high-technology industry, substantial natural and human resources bases, . . . (and) a modern transportation and communications infrastructure,'' say these experts, the West ''should recover more rapidly than the nation as a whole.''