When it comes to jobs, the economy and the housing market, it’s going to be slow going for a while. Chapman University released its annual economic forecast today. As with other recent economic forecasts, the magic word in this one is “slow.”
The Chapman forecast predicts the addition of 23,000 jobs in Orange County next year. That’s a growth rate of about 1.7 percent. It sounds pretty dismal until you compare it to the state’s predicted employment growth rate of 1.2 percent.
Chapman economist Esmael Adibi says the job growth will span a variety of sectors, except construction. Adibi says one important growth area will be professional services.
"You have accountants. You have attorneys. You have computer programmers. So that’s a very big one. And typically that pays a little bit better than the rest of the sectors that we look at," Adibi says. "Health care, educational services should do fine. Leisure/hospitality actually is a little bit improving, partly because consumers look like they’re spending a little bit more money than last year."
Adibi says consumers have lacked confidence in the last couple of years, largely because people kept hearing about the bad economy and high unemployment rates.
"So, [the] last couple of years, even people who were employed were careful because they weren’t sure what’s going to happen the next day," Adibi says. "Now they’re feeling a little more confident that they survived, you know. So that brings about that 'pent up' demand – that is, things that they wanted to do that they didn’t do the last couple of years, whether it’s a vacation, buying that beautiful dress or you know, flat TV or computer."
So Adibi says that “pent-up” demand is starting to become real demand.
But one sector of the local economy that's still dragging is housing and construction.
He says that’s going to take some time to improve.
"We have to first get a stabilization in home prices. We are seeing that in the low end of the market – that is, homes around 300- to 400,000, even $500,000. Probably we’re not going to see much of a price decline," Adibi says. "But it’s still a problem with expensive homes, when you go to 600-, 700-, 800,000 dollar homes, those prices are still subject to decline because the move-up market is not there. And whenever you see home prices going down, people are still a little nervous."
Adibi says that means the construction sector will take longer to recover. He points out when construction doesn’t zoom up, neither does the rest of the economy. So he says the slow recovery of housing and construction is a sign that overall recovery will be slow.
And Adibi says Orange County's economy will look a little bit different once it fully recovers from the recession. He says every time we come out of a recession, the composition of the economy changes.
"In the ‘90s, if you remember, we had all defense spending. So once that went, it went with those industries and we tried to move on something else," Adibi says. "Now, in 2000, the booming sectors – they were construction and mortgage industry. We’re not going to get those two back anytime soon."
Adibi says instead, industries like health care, medical equipment, green energy and even digital gaming will help carry the Orange County economy, helping it to more solid ground.