Chapman offers generally rosy forecast update

It was mostly good news Thursday morning as Chapman University revealed its 2014-15 Economic Forecast update in Costa Mesa.

Orange County is showing broad growth in all job sectors — among them construction, education, healthcare, professional and business services, and leisure and hospitality — with payroll jobs expected to increase by 2.6%, or 37,000, in 2014.

In 2015, an additional 43,000 jobs, or 2.9%, are predicted, Esmael Adibi, director of Chapman’s A. Gary Anderson Center for Economic Research, said in his presentation in the Renée and Henry Segerstrom Concert Hall.

In 2013, the county ranked No. 3 in job growth statewide.

Adibi also noted that leisure and hospitality, though generally reflecting low-wage work, is the only job category thus far that has more than recovered since the Great Recession. One reason for that boost, Adibi said, is the state’s high tourism appeal.

Orange County fares comparatively well in its unemployment rate — 5% as of April — second-lowest among California’s 10 largest metropolitan areas. San Francisco is the lowest at 4.3%, and the statewide average is 7.8%, according to state Employment Development Department figures.

Chapman’s research does not foresee another housing market bubble, Adibi said.

He added that since low interest rates and plummeting prices made housing more affordable during the recession, the market now is becoming prohibitively expensive, particularly for first-time home buyers burdened with student loans.

Chapman economists predict that in 2015, an Orange County family of median income will spend 38.4% of its income toward the mortgage on a median-priced home — a sharp increase from 27.2% in 2012.

Students loans now total $1.1 trillion nationwide — a significant jump from $36.3 billion in 2005, Adibi said.

“This is becoming a major debate on the national level,” he said.

Chapman predicts that home prices and mortgage rates will continue to rise. Adibi later tied the rises to the No. 1 reason people leave California: its high cost of living, particularly when it comes to housing.

Chapman President Jim Doti, who spoke on nationwide economic trends, said the post-recession recovery continues to “have legs” and press on.

“But like any recovery,” he added, “there can be a shock to the system that ends it prematurely.”

He does not anticipate a shock in the form of a constricting labor market or tightening of fiscal policies. However, he warned that an oil price hike or international political crisis could affect the U.S. economy.

Doti echoed Adibi’s concerns about the unaffordability of housing — especially for first-time home buyers.

Still, he noted, the housing stock is more affordable than it was before the 2008-09 recession period.

Chapman’s next Economic Forecast conference is scheduled for Dec. 3 in the Renée and Henry Segerstrom Concert Hall.

The Daily Pilot and its parent company, the Los Angeles Times, sponsored Thursday’s conference.