this year," said Ed Fawcett, president of the Costa Mesa Chamber of
Economic growth, while generally stagnant during the six-month
period ending today, should pick up at between 3% to 5% in the two
cities, officials said. During the first three months of the year,
the Commerce Department reported Thursday, the nation's economy grew
a slack 1.4%.
High energy costs, a still-deteriorating job market and a series
of expected tax hikes could mute any chance of a recovery from the
gloomy economic conditions ushered in by the sharp stock market
declines that began in 2000.
Chip Hanlon of Newport Beach's Euro Pacific Capital Inc. said
economic conditions should improve somewhat in 2003, but only
temporarily. Stocks rallying since March have begun to pause somewhat
over the past week.
"The stock market seems to be predicting an uptick in economic
activity," Hanlon said. "There will be some corresponding economic
strength. It just won't be lasting."
Nestled along the coast of Orange County, Newport-Mesa has dodged
the worst of an economic downturn that has hit California
Home values have risen, and car and truck dealerships and home
furnishings stores have fared well, said Richard Luehrs, Newport
Beach Chamber of Commerce president.
The ending of combat in Iraq, Luehrs said, has also spurred some
"We're seeing companies starting to loosen their purse strings,"
President George W. Bush's tax-cut plan, which goes into effect on
July 15, should be another economic stimulator, Luehrs said. Workers
will begin seeing extra cash in their paychecks.
"I believe that people have been conservative in their spending
habits," Luehrs said. "They'll begin to see an increase in their net
A widely watched consumer confidence report, released Wednesday by
the Conference Board, showed a drop off in spending in May. The
report took a more optimistic view of the second half of the year,
predicting increased spending then.
Less clear, the experts said, is whether the Federal Reserve's
13th rate cut since early 2001 will be a boost to business. The Fed
cut to 1% the rate banks use with each other in securing overnight
Also problematic for businesses has been the still-high cost of
electricity and rising costs of workers' compensation lawsuits. The
state Legislature is not expected to significantly address what some
say is rampant workers compensation fraud.
Fawcett said the state's inhospitable atmosphere for business has
driven companies across the border. A division of Canon USA in Costa
Mesa pulled up stakes in 2002.
Assemblyman John Campbell, who represents Newport Beach, agrees.
"The best office of the Arizona and Nevada chambers of commerce is
the capitol building in Sacramento," Campbell said. "It's costing so
much [to run a business in this state]."
* PAUL CLINTON covers the environment, business and politics. He
may be reached at (949) 764-4330 or by e-mail at