Please Start the Recovery Without Me From The Newsroom by Michael Hart Here we are, out of the first quarter of 2002 and on our way into the second. Since late last year, experts have told you this would be about the time you could expect the economy to bottom out and the recovery to begin, building momentum right on through to the end of the year. And that’s what you’re feeling, right? Sure, some of the signs are there. We’ve learned in the last week that national unemployment rates are beginning to edge down. Of course, local jobless rates are hard to trust right now because, thanks to state unemployment compensation maximum levels that went up Jan. 1, many of those out of work waited until then to file their claims, so real numbers are hard to extrapolate. Business at most retail stores and restaurants appears to be back to normal six months after Sept. 11, leading us to believe there won’t be any lasting impact from that day’s tragedies. Car sales continue to moderate even after all those zero-interest deals ran out. Month after month, it seems, Valley realtors have all the business they want if not enough houses to sell as the Southland Regional Association of Realtors just keeps pumping out press releases announcing record-breaking sales figures and prices. Even if sales at every Valley company haven’t regained their levels of, say, a year ago and first-quarter earnings reports are still crammed with unhappy news, the attitude of many people is, “There’s light at the end of the tunnel.” Right? Not so fast. There are still a few things that can go wrong. First, for every news story you read about film production picking up or a local company venturing out into the market with an IPO, there are several more stories about the Nortel Networks and the Ciscos of the world continuing to experience slow sales that have implications for their high-tech suppliers here in the Valley. Talk to the CEOs of Ixia Inc. or MRV Communications and they struggle to sound enthusiastic about their prospects for the rest of this year. If high-tech companies are still supposed to be the economic engines of the San Fernando Valley in the future, business investment on the part of players in the world beyond the Santa Monica Mountains will have to pick up. Second, whatever happened to last year’s outrage over the high price of gasoline? I remember a time a few months ago when people were postponing trips, talking car pools and adding surcharges because the price of a gallon of gas had jumped from a dollar to $1.30 and on to $1.60 and then $2. Then, just as quickly, the price was back at a dollar and all was right with the world. Well, gas has snuck back to $1.60 and $1.70 and that old gas-pump rage is nowhere to be found. Maybe, you say, we’ve learned to live with it. But keep in mind there hasn’t been a real recession in more than a quarter of a century that oil, its scarcity and its price didn’t play a part in. Finally, if you’ve been around long enough to remember the early 1990s, the confidence you feel in the value of your house should have a little edge to it. If you remember, prices don’t go up forever. Eventually, that bubble does burst. At some point, housing prices outstrip the incomes required to pay them. Maybe, you say, but this is nowhere close to the situation in the Valley 10 or 15 years ago. True, but perhaps never before have so many taken advantage of such low interest rates to borrow so much money on so many homes to fuel the one part of the economy that has not flagged over the past year: the consumer sector. Maybe you do see that famous light at the end of the tunnel, but it still might be too early to relax. Michael Hart is editor of the San Fernando Valley Business Journal He can be reached at [email protected].