California faces a potentially grim economic outlook as the effects of growing foreclosures amid a faltering housing market ripple statewide, experts warned Monday.
"We are on the verge of recession," economist Ross DeVol of the Milken Institute said at the institute's annual State of the State Conference in Beverly Hills.
And DeVol, part of a panel examining the impact of problems in the subprime-mortgage industry, said a drop in home sales affects everything from employment and consumer confidence to retail sales and tax revenue.
The problems also come as oil prices reach record levels and lenders move to tighten consumer-credit regulations, he said.
And he warned that if reduced consumer spending leads to a recession in California, the programs could spread nationwide.
DeVol said it likely will require government action to ease strains in the financial market and prevent a recession.
Angelo Mozilo, chairman of Calabasas-based Countrywide Financial Corp., echoed that view. Countrywide, the nation's largest lender, announced plans last week to restructure $16 billion in consumer loans.
Mozilo, whose company has become a symbol for the problems in the housing market, said his firm has received no help from the government and is bearing the brunt of criticism for the current problems.