Economists at Chapman University in Orange say national and local economic recovery will be more like the tortoise than the hare - slow but steady. They released their annual economic forecast today in Costa Mesa.
In their last annual economic forecast, economists from Chapman University predicted the US gross domestic product would turn positive by the third quarter of this year. It did.
And they say it means the national recession’s over, but California and Orange County recovery will lag behind a few months.
"Part of the reason is because California and Orange County disproportionately benefited from the construction sector and the mortgage industry," says Chapman economist Esmael Adibi. "And the demise of these two sectors really damaged not only jobs in THESE two sectors, but the multiplier effect, impacting a whole bunch of other sectors. The only sector that did decent in 2009 was healthcare."
Adibi says that’s no surprise because the growth in healthcare isn’t so much based on the economy, but rather our aging population. He says healthcare should keep growing next year. And he says private education is right up there, too.
"The reason is the state deficit problem," Adibi says. "Universities are becoming very expensive now. If you look at public universities – whether UC system or Cal State system – they have raised the tuition, so they’re making basically private universities a little bit more attractive. So private education is going to do fine."
The Chapman University economists think high-tech manufacturing will do fine, too. They say the demand for high-tech goods like computer chips and pharmaceutical equipment is increasing quickly. Adibi says that’s in part because the value of the US dollar is down, which means our trading partners are buying up goods.
He says the leisure and hospitality sector will see an upward bump, too, also because of the lower dollar.
"That means we’re not going to be able to go outside of the country to vacation. So it means we’re going to vacation here. And at the same time, we’re seeing foreigners coming here," says Adibi.
They’re coming here to visit Disneyland or Hollywood – and those visitors and their dollars will keep tourism afloat.
But Chapman University’s Anderson Center for Economic Research says that doesn’t mean we’re suddenly going to have a plethora of new jobs.
"Everybody catches on that unemployment number. 'Oh, it was 9 percent. Now it’s nine-and-a-half. Now it’s ten, ten-and-a-half,'" explains Adibi. "But I think people should concentrate on job creation because to bring the unemployment down, we have to have private sector. Right now, government is the only one hiring – by the way, not the state and local. Federal government. But we need [the] private sector to start hiring people. And once job creation kicks in, then unemployment goes down."
We’re already starting to see signs of that. The federal government announced last week that the national unemployment rate dropped a fraction of a percent to 10 percent last month.
As of October, California’s jobless rate hovered at 12.5 percent. We’ll get a look at the state’s November figures when they’re released next Friday.
Chapman economists say the worst is behind us, but growth will be anemic and fragile - to the point that if something unexpected happens, it could push us into another recession.