Slowed Economic Pace Expected to Last a Year

Orange County’s economy, which last year grew at a feverish rate, has slowed substantially this year and will remain at that slackened pace for at least the next year.

And that’s the good news from the semi-annual economic forecast unveiled by the Chapman College Center for Economic Research.

If mortgage and interest rates shoot up, or if proposed federal income tax revisions make real estate a less attractive investment, the county’s economy could take a nose dive, said James Doti, the research center’s director.

Much like economists throughout the nation who are predicting a flat-to-declining national economy, Doti said the county’s economy, while currently strong, is vulnerable. “We obviously don’t know what will happen, but negative considerations are more probable at this point than an optimistic scenario,” Doti said.

Doti’s message, which he acknowledged was fairly dark, was accompanied by statistics showing that the county’s economy, despite the slower growth rate, remains healthy, and, in some areas, even robust.

For example, Doti said, taxable sales are projected to reach a record $21.2 billion this year, a 15% increase over those of 1984. In addition, he said, builders are expected to request more than $2 billion worth of construction permits for the second straight year. “They’re going gang-busters in construction because of the lower interest rates,” Doti said.

Furthermore, he predicted that the county’s total employment would remain over the 1 million mark, a peak it hit earlier this year, throughout the remainder of 1985. The projected 7% job growth rate for the county is nearly three times the nation’s 2.5% increase and substantially higher than the state’s projected 4.5% rate.

Nevertheless, Doti stressed that the torrid growth rate the county experienced in 1984 has ended and that increases over the next 12 months--as far in the future as he would predict--would be less dramatic.

The county job growth rate, which averaged about 9% last year, gave the county about 81,000 new jobs over all of 1984. But only about 72,000 new jobs will be created this year, the center predicts.

In addition, Doti said he was particularly worried by the “disturbing trend” towards making the county more heavily dependent on defense-related spending. Doti said that while manufacturing jobs have been lost in the high technology sector, including jobs at Apple Computer Inc., Printronix and MIA Basic Four, they have been more than made up for by employment increases at aerospace companies, such as Hughes, McDonnell Douglas and Rockwell International.

Although Doti offered no precise statistics, he said future studies would prove his analysis. And he said he was concerned.

“This makes Orange County more vulnerable to future cycles in military spending,” he said. “Although we may be benefiting now from the increase in defense spending, in the future we will be hurt by decreases. And it’s harder to make up for the loss than it is to gear up to fill those jobs.”