Retailers and manufacturers in California are being relentlessly battered by a combination of economic forces, with more hardships forecast.

The recent liquidation of Mervyns and bankruptcy filing of Gottschalks Inc. — California-based chains — were benchmarks in a recession that has left stores throughout the state with fewer customers.


 Clothing manufacturers are reeling from the retail weakness, resulting in some shutting down, while others take measures to cut staff, costs and inventory to survive. In addition, apparel businesses are bracing for negative fallout from an imminent 1 percent boost in the state sales tax, which was included in the legislative package that closed the state government’s record $42 billion budget shortfall.

“Most of us have just written off 2009 completely and are trying to focus on the better times ahead, what we hope will be 2010,” said Fred Levine, owner of the M. Fredric chain of contemporary boutiques based in Agoura Hills, Calif.

The Los Angeles County Economic Development Corp. projects an estimated 6 percent drop in retail sales for the state’s largest county this year, compared with a 1.1 percent decline in 2008. Measured by the number of residents, the average retail sales per capita in the city of Los Angeles equals $7,634 — versus $51,171 in Beverly Hills and $25,446 in West Hollywood.

As home foreclosures soar, Southern California’s median home price dropped 39 percent to $250,000 in February from a year ago, and the median price in the Bay Area fell 46 percent to $300,000 in January, according to MDA DataQuick, a San Diego-based firm that tracks the real estate market.

Economists and analysts said the broadness of this downturn works against a quick turnaround. Previous recessions were caused by the collapse of a single sector in the state — the dot-com bust earlier this decade and the aerospace industry’s decline in the Nineties. This time California, which has the biggest economy and population of any state, will rely on outside forces to spark a revival because of the overall erosion of its financial condition.

“We have three big sectors in our economy, which are really tied to the world,” said Stephen Levy, director and senior economist at the Center for Continuing Study of the California Economy in Palo Alto, Calif. “We are tied in with tourism…the world venture capital market and with foreign trade.”

The number of tourists visiting California in 2008 will fall an estimated 2 percent from 355 million in 2007. The amount of money that tourists spent is anticipated to be flat at $96.7 billion in 2008.

The upheaval hasn’t spared Hollywood, although box office ticket sales continue to grow — up more than 17 percent to date from a year ago, according to Media by Numbers — and California has approved a $500 million production tax credit incentive program. But at least 20 of 39 new television pilots are scheduled to shoot outside of the Golden State, trade newspaper Variety reported. Film production has been hampered by cost-cutting, financing challenges and protracted contract negotiations with the Screen Actors Guild, among other factors. Variety said there are 118 wide release films set to open in 2009, a 16 percent decline from 140 last year. That means fewer jobs in California.

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