Election Section

LOS ANGELES — The economic impact of the terrorist attacks is beginning to take a toll in California, which had held steady before Sept. 11 amid a national downturn in consumer and business spending. 

Earlier this year, strong tourism and business travel had offset troubles in the technology and international trade sectors. But tourism has plummeted in the past month, leaving thousands of hotel, restaurant and airlines workers without jobs or working reduced hours. 

Those job losses won’t be seen in official government statistics until November, but economists say California’s economy will almost certainly enter a mild recession in the final quarter of 2001 and may not recover until at least the middle of 2002. 

“There is no question that our economy is now experiencing the full impact of the national economic slowdown,” Gov. Gray Davis said Thursday while ordering state agency heads to prepare to cut their budgets by 15 percent in the next fiscal year. 

Another indicator of the slumping California economy came when new unemployment numbers were released Friday showing a slight increase to 5.4 percent in September. The figure reflected a 0.5 percent jump from September 2000. The jobless rate for August was 5.3 percent 

Those figures, however, were based on surveys conducted on or before Sept. 11 and do not reflect dramatic job cuts in the tourism industry that have been so severe that Standard & Poor’s recently placed Anaheim’s bonds on “credit watch.” Anaheim is the West Coast’s largest convention city. 

With such a huge economy, California would rank as the fifth largest in the world if it stood alone. Thus, the fear is that a recession here would shake the national economy. 

“Two large sectors of the national economy slowing down – California and New York – will definitely have an impact on the United States,” said Jack Kyser, chief economist at the Los Angeles Economic Development Corp. 

The high-tech Silicon Valley area has suffered sharp job losses and drops in home values all year and will likely feel even greater pain in the coming months. Unemployment there reached 5.9 percent in September – a huge rise from the 1.3 percent last December. 

But the latest worry is tourism. 

From San Francisco’s Pier 39 to hotels in posh Beverly Hills, hundred of housekeepers, cooks and other low-wage workers have lost their jobs or seen their hours cut severely as tourists stay away and airlines cut flights. 

San Francisco’s city budget may come up $100 million short by the end of the fiscal year due, in part, to reduced tourism and the resulting decrease in hotel bed taxes and just about every tax that fuels the city’s $5.2 billion annual budget. 

In Anaheim, at least seven conventions that were expected to draw a total of 35,000 people were canceled in the days after the attacks. Economic losses were estimated at about $12 million. 

Hotels across California have seen some of the lowest occupancy rates in a decade and have moved quickly to lay off workers. About 25 percent of hotel union members in the state have been laid off and another 15 percent have had hours reduced, union officials said. 

In Santa Monica, nearly 200 people showed up this week at a relief center opened by the union representing hotel and restaurant workers. Volunteers helped workers apply for unemployment benefits and food stamps and distributed bags of groceries. 

Rhina Gonzalez and her husband, Cesar Perez, both lost their jobs as housekeepers in area hotels after Sept. 11. The two have four young children. 

“This is very scary for me,” she said. “I have to bring Christmas to my kids. I have to buy presents. I have to give them a nice Christmas, the same as other years, and I can’t.” 

Some economists predict the economic impact of the Sept. 11 attacks, while sharp, will be temporary. 

California still has about 200,000 more jobs today than it did at the same time last year and some jobs are expected to be created as the result of increased defense spending, said Stephen Levy, director of the Center for Continuing Study of the California Economy, a Palo Alto research firm. 

Levy said that even if the state should lose 300,000 jobs — far more than even the most dire estimate to date — that would only result in an unemployment rate of 6.5 percent. 

While far higher than the all-time low unemployment rate of 4.5 percent reached earlier this year, it would be far less than the 9.7 percent in the early 1990s when the state lost more than 500,000 jobs in the last recession, Levy said.