Fires Won't Hurt Long Term, Economists Say

Monday, 22 Oct 2007 05:39 PM

By Newsmax staff

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The LA Times reports that despite the destruction wrought by the California wildfires, some observers see a silver lining -- an upturn in construction, down 28,600 jobs through September, according to the state Employment Development Department.

"In the odd nature of economic accounting, this will probably be a stimulus," said Alan Gin, a University of San Diego economist. "There will be a huge amount of rebuilding in the next couple of years, financed by insurance payments."

Meanwhile, according to the Times report, attractions such San Diego's SeaWorld and the Wild Animal Park near Escondido will suffer short-term.

"When you lose a day of business in a theme park, that hits your bottom line pretty quickly," Jack Kyser, chief economist with the Los Angeles County Economic Development Corp. told the Times.

The destruction thus far has not equalled the $3 billion to $4 billion caused by the 2003 wildfires, according to Don Windeler of Risk Management Solutions, a Bay Area firm.

But that could change rapidly if the fire spreads to more densely populated areas, he added ominously.

Furthermore, reports the Times, the wildfires are raging through some of the heaviest agricultural areas in San Diego.

Farm officials are concerned that the county's avocados, citrus, nursery stock, flower crops and vineyards all have been hit hard.

"We grow 200 crops in the county and most have been in the pathways of the fires, but we are still evacuating people and no one has been back in to know what has happened," Dawn Nielsen, the county's deputy agricultural commissioner, told the Times.

What’s more, notes the report, the fire emergency is aggravating the housing market, already under falling prices and rising foreclosures.

But Jeff Shea, a real estate broker in Rancho Bernardo, told the Times that the housing market was already so slow that the fire wouldn't have much effect.

More probable, Shea said, is a spike in rental rates as evacuees seek shelter. He also noted concern that homeowners insurance rates in the area will increase -- impacting home sales a few years down the line.

Los Angeles economist Christopher Thornberg concluded that fires had mainly a short-term economic effect. "Can something like an earthquake or fire cause a local recession? Absolutely not," he said.

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