Hd — Controlled Exuberance The Valley has come back. As we near the end of 1997, the San Fernando Valley, like the rest of Southern California, has fully embraced the economic good times. Gone are the downbeat residues of the early ’90s recession, as well as the Northridge earthquake. In their place has been a renewed buoyancy about the Valley’s potential, the likes of which we haven’t run across in almost a decade. It can be seen in home sales, in commercial development, in stepped-up movie and TV production, in the activity at area malls, and in the ever-tightening labor pool. It also can be seen in less quantifiable ways: Generally speaking, people are just more optimistic about their lot whether it’s their jobs, their investments or even their general safety. Government is still considered an ineffective and destructive force no doubt explaining the secession drive but surveys show that more people find government less important in their lives. As seen in our this month’s Valley Forum question (on this page), business people can feel this enthusiasm and are planning accordingly for next year. “Our business has been getting better for the last 24 to 30 months and I think that will continue. If 1997 was a good year, ’98 will be great,” said Donald Hudson, senior vice president of Warner Center Properties in Woodland Hills. Earlier this fall, executives throughout L.A. were saying much the same thing in a survey conducted for the Los Angeles Business Journal by Deloitte & Touche. Not only do 87 percent of L.A.-area executives polled expect sales in 1998 to be higher than this year, 43 percent expect the gains to be higher than 10 percent. Those are astoundingly upbeat numbers, but in truth, they reflect record earnings, low inflation and little joblessness. They also reflect the remarkable durability of the U.S. financial markets, despite the drubbing that’s been taken in Asia this fall. We applaud all the successes and figure that 1998 will bring more of the same (at least at the start of the year). But we’re also old enough to remember the bad times and more to the point, to recognize that the economy’s business cycle inevitably has its ups and downs. Now granted, the parameters of that cycle have obviously changed in the last half-dozen years companies are run more efficiently, computers have enhanced productivity, and here in the Valley as well as the rest of Los Angeles, there is less reliance on Fortune 500 corporations and more on small to medium-sized entrepreneurial businesses. But though it has been altered, the business cycle has not gone away. And in fact, many of the local economic indicators, such as the L.A. County unemployment rate and the number of bankruptcy filings remain stubbornly high. What concerns us is that the current ebullience could prompt some of the less-experienced entrepreneurs to make decisions based on wishful thinking rather than sound judgment. As budgets are being finalized for the coming year, good sense, and not irrational exuberance, would seem to be the watchwords. We actually think exuberance is fine it’s part of what makes the Valley such a dynamic business community. The trick is to be sure it doesn’t extend beyond marketplace reality. That’s when people start losing money.