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Experts expect area to rebound fairly fast

LOS ANGELES -- Losses from the devastating Southern California wildfires are pegged at $1 billion in San Diego County, and the tally will only go higher as other areas add up the costs to rebuild.

Still, while the impact is huge, experts say the region's strong economy should make for a fairly quick rebound.

"It's a human tragedy, it's not an economic tragedy," said Stephen Levy, senior economist at the Center for Continuing Study of the California Economy. "It's asset losses, it's property damage, probably a lot less than what people have lost through foreclosures."

About 1,600 homes and more than 410,000 acres have been scorched across seven Southern California counties plagued by the wind-driven fires.

Ron Lane, director of emergency services in San Diego County, the hardest-hit area, said damage in that region has reached $1 billion. At least 1,200 homes had been destroyed in the county.

Losses linked to the fires could climb even higher throughout Southern California if winter rainstorms send mud cascading down fire-ravaged hillsides into neighborhoods, said Kevin Klowden, managing economist for the Milken Institute.

"Vegetation is going to have been basically wiped out on a number of hillsides," he said.

A big slice of the repair bill will go toward rebuilding downed power lines and roads, including a stretch of Interstate 15, the main highway from Southern California to Las Vegas.

In addition, agricultural areas in San Diego have been damaged, hurting avocado, citrus and grape crops.

Economists are also eyeing disruptions to businesses and productivity, as nearly 500,000 people were evacuated and businesses were forced to close their doors temporarily.

Tourist destinations, such as SeaWorld in San Diego and the Wild Animal Park in Escondido, were forced to shut down.

Along with those temporary disruptions, the impact of nationally televised images and media accounts of Southern California ablaze likely will dampen tourism for some time, economists said.

"Incidents like this will drive away a certain number of people," Klowden said.

Still, rebuilding homes and businesses with an influx of insurance and government aid should stimulate the lagging construction industry, which has lost 28,600 jobs in the past year amid the housing slump.

The pace of that rebuilding could be slow compared with the region's recovery after the 2003 firestorms that destroyed more then 3,600 homes and caused insured losses surpassing $2 billion.

"Back then, the home building market was quite strong," said Jack Kyser, chief economist of the Los Angeles Economic Development Corp. "This time around, home building is slumping."

Jerry Nickelsburg, an economist and co-author of the quarterly University of California at Los Angeles Anderson Forecast, said calculating the losses will be an ongoing process.

But the economic pain might be short-lived, he said.

"All in all, the fires occurred in more remote, residential areas," Nickelsburg said. "It will have very little effect on the medium and long-term economic growth and economic health of the region."

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