"California is tip-toeing along the edge of a recession, whilesome of its larger metropolitan areas have been in one sincemid-2007," the report states. It shows the balance of 2008 and muchof 2009 seeing a mixture of good and bad news for California, "withthe outcome looking more and more precarious."

Since the Downtown Los Angeles-based LAEDC's last report inFebruary, the Southern California region, the state and the nationhave undergone myriad changes, namely skyrocketing costs of energyand commodities. And "don't forget, you have the intensification ofthe financial sector problems," says Jack Kyser, one of the authorsof the report and chief economist for the LAEDC.

"Look at what's happening at IndyMac; in a way it's kind offunny to watch these people clamoring to pull their money out ofIndyMac, and it's historically one of the most solid financialinstitutions around and these people are panicking," Kyser says."You have a lot of fear out there among consumers."