Problems dog state economy

Tuesday, July 22, 2003 | 11:08 a.m.

LOS ANGELES -- California's economic recovery is expected to lag behind the rest of the nation's, as problems ranging from the state's $38 billion budget shortfall to out-of-control workers' compensation insurance costs continue to take their toll on business and dampen hiring, a new forecast says.

While economists expect the nation to undergo a modest expansion in the second half of 2003, California, which accounts for 15-16 percent of the U.S. economy, will likely trail behind as long as the state's budget woes go unsolved, the Los Angeles County Economic Development Corp. reported Monday. The group conducts its forecast twice a year.

"We're looking for the national economy to move right along, not at a great rate of speed, but California's obviously going to act as a brake on the national economy," said Jack Kyser, chief economist at LACEDC, a private, not-for-profit business association.

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