of the possible hit to Southern California's economy if Wells Fargo & Co. is the ultimate victor. But just how big would that blow be? According to the Los Angeles-based Economic Development Corp., a not-for-profit group that promotes private enterprise in the city, it would basically be the difference between an accelerating recovery and a steady recovery from a five-year slump for Los Angeles County. The group figures that the county would fare much better if First Bank System Inc. were the successful suitor. On the other hand, a merger between San Francisco-based Wells and Los Angeles-based First Interstate "could slow down the growth we expect in 1996," said Jack Kyser, chief economist of the Development Corp. According to the Development Corp., the California slump started in 1990, when employment in the state stood at an all-time high of 12,499,000. By 1993, statewide employment had plummeted to 12,045,000. Employment grew in 1994 to 12,150,000 jobs, and the Development Corp. is predicting statewide employment of 12,390,000 by the end of this year. Three-quarters of California's job losses occurred in Los Angeles County, which was stung by a halving of employment in the aerospace industry, and also by a devastating earthquake in 1994 and the 1992 riots. The Development Corp. counted 4,133,000 jobs in Los Angeles County in 1990, and only 3,704,000 jobs in 1994. This year, the county is expected to add 70,000 jobs to that total. The Development Corp. had been expecting even more jobs to be added in 1996. But Wells Fargo's unsolicited merger bid for First Interstate caused it to scale back its predictions. Specifically, Mr. Kyser said he now expects that a Wells Fargo merger with First Interstate would result in job losses of about 7,500 throughout California. Most of those jobs would be lost in Los Angeles County in the second half of 1996, he predicted. These job losses would come amid gains and losses in other areas. For example, Mr. Kyser said job losses in aerospace are expected to stop in 1996, while job gains are expected in the entertainment industry. This is balanced against an expected loss of 2,000 jobs from the closure next year of a Broadway Stores headquarters in Los Angeles. (Broadway is being acquired by Federated Department Stores.) An additional 3,000 job losses are expected in 1996 among employees of the county government because of budget cuts. As a result, if Wells ends up buying First Interstate, Mr. Kyser said he expects Los Angeles County to add only 71,000 jobs in 1996. Job gains would be higher if First Interstate were to merge with First Bank System. That's because such a merger would result in losses of only 3,000 to 4,000 jobs in Los Angeles County, Mr. Kyser said. He added that if First Bank System were to move its headquarters from Minneapolis to Los Angeles, the shift could end up adding jobs in Los Angeles County, instead of cutting them. Mr. Kyser said that Los Angelenos believe a headquarters move is a distinct possibility since First Bank chairman John F. Grundhofer is from Los Angeles. Mr. Kyser also said that a First Bank merger would be likely to result in fewer office closings in Los Angeles County than a merger with Wells would, since First Bank plans to retain a major administrative office in Los Angeles. Mr. Kyser said that First Interstate and Wells Fargo control one million square feet of the total of 30 million square feet of office space in downtown Los Angeles. Any office closings would be bad for the weak office market in downtown Los Angeles. The office vacancy rate in Los Angeles county is 19.9%, well above the national rate of 14.7%. Mr. Kyser said the downtown market is the weakest in the county.

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