Forecast: O.C. economy to add 60,000 jobs through 2013
Chapman University economists forecast that home prices will increase and the local economy will continue to grow through next year, bolstered by construction spending and an improved national outlook.
At the biannual presentation Wednesday, they predicted the Orange County economy will add more than 60,000 jobs in 2012 and 2013 combined, and that the U.S. gross domestic product will grow 2.3% and 2.6% in each year, respectively.
“Don’t expect a recession. Don’t expect job losses,” said Esmael Adibi, director of the university’s Anderson Center for Economic Research.
Construction spending started to increase in early 2011 and is projected to grow along with manufacturing — two of California’s most important sectors.
Despite a downturn in Europe, merchandise exports are expected to grow by about 9% through 2013. That drives Orange County trade and transportation, which are also expected to grow.
The combination of an improving job market and record home affordability has generated more housing demand, Adibi said. People have begun to move out of rentals, causing a residential construction resurgence.
The county’s median single-family home price is expected to climb by 7.1% in 2013, though that increase is mainly because of fewer inexpensive distressed properties flooding the market, the forecasters said.
Irvine-based investment banker Adam Connors said many of his friends were looking for homes under $750,000, and were finding the market exceptionally tight.
“It’s like 2006 all over again,” he said after the presentation at the Hilton in Costa Mesa.
People have more money in their pockets too, the economists said.
They refinanced homes during the recession, bringing the average household’s debt payments to about 11% of their disposable income, down from 14% at the peak of the housing market.
“That’s what’s really fueling consumer spending,” Adibi said.
Growth in consumer spending bodes well for Jeffrey Pomeroy, the Newport Beach-based director of construction management firm Abacus.
His firm specializes in university or community college construction projects, but would like to expand into the retail sector, he said after the forecast.
“From this, it looks like our business will improve,” Pomeroy said, adding that he is looking expand his workforce of 39 people.
Real estate job cuts during the recession hit the county hard, slowing the overall economy more than at the state and national levels. But Orange County recently surpassed the rate of job growth in California and the U.S.
Government jobs, meanwhile, are growing at a much slower rate, as public coffers are increasingly squeezed by declines in tax revenues.are still a serious problem.
State and local government jobs based in Orange County are forecast to grow by just 0.4% in 2012 and 1.3% in 2013.
The risk of a Eurozone collapse, the termination of Bush-era tax cuts, or a faltering housing market all threaten the national, and thus local, economies, they said.
But like other coastal areas in the state, Orange County’s diversified economy is expected to grow faster than inland areas reliant on construction or other singular sectors, the Chapman forecasters said.
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