Trade Deficit Drop Expected to Aid County : ‘Solid Gains’ Predicted for Local Economy in ’87

Fueled by a predicted decline in the foreign trade deficit, Orange County’s economy for 1987 is expected “to come in with modest, solid gains for the year, very much in line with the national economy as a whole,” said Kathleen M. Cooper, Security Pacific National Bank’s chief economist, on Tuesday.

Predicting that the real gross national product will increase 2.5% during 1987, Cooper said the county can expect a somewhat similar growth, “though maybe at a slightly better tilt,” because of the area’s low, 4% unemployment rate and above-average personal income.

Cooper, speaking to about 200 bankers, investors and businessmen at the bank’s ninth annual economic conference at the Newport Sheraton, said the bank does not make specific growth predictions for geographical regions of the state.

The economist’s prediction equals the real GNP growth recorded for 1986, but in contrast to last year, consumer spending “will not be the star” of the economy, Cooper said.

Rather, the move to reduce the nation’s $170-billion foreign trade deficit “is the only umph “ keeping the year’s economy from lagging behind the gains of the last five years, she said.

Computer Makers Suffer

“We believe that process is under way,” said Cooper, who predicted a smaller trade deficit by the end of 1987, though she added that the turnaround would not be dramatic because of the weakening of the U.S. dollar overseas.

Cooper said the county’s computer manufacturing firms will continue to suffer from foreign competition, but “as the tide turns on these types of goods (with the expected reduction of the trade deficit), it’s going to help Orange County as well as the nation.”

With a present vacancy rate of 20%, office construction in the county should decline, the economist said.

Cooper’s forecast is fairly congruent with the national and county economic predictions made last month by James Doti, dean of the Chapman College School of Business and Management in Orange.

Doti said he calculated a real growth rate of 3% for the county in 1987 compared to a 2% rate for the nation. “We’re a little more pessimistic (for the nation)” than Security Pacific is, he said.