Value of Chapman Forecast More in Its Parts Than in Sum, Users Say

The professors and students are back in their classrooms, the businessmen are back at work and the press has reported Chapman College’s prediction of a flat county economy in 1988.

But does anyone care?

More than 1,000 people attended Chapman’s 10th annual economic and business review in Orange on Thursday, many of them paying $30 for the opportunity.

Most of those people, however, use the predictions for the general trends they point out rather than for the specific data they contain, said conference attendees and even the prognosticators themselves.

The basic value of broad economic projections--especially given the seemingly universal skepticism about the accuracy of those forecasts--is the consensus that may emerge.

“If 10 of 10 influential economists forecast a decrease in building activity, and all are publicized, you can’t ignore that,” said Ken Agid, an Irvine real estate industry consultant.

“They have value because we all look for consensus, and they tend to become self-fulfilling prophecies, because if enough bad news is disseminated by the media, then people believe it and react accordingly,” he said.

And the value of a single, highly focused projection--such as the Orange County forecast Chapman College produces each year--is more in its parts than in its sum, according to those who use it.

“As a company, we attend several of these each year, including the Orange County Economic Outlook Conference that the (county) Chamber of Commerce puts on,” said Tor Eckert, president of Eckert Enghauser & Partners, an executive recruiting and merger and acquisition consulting firm in Newport Beach.

“We use the information we get from them for strategic planning--for identifying growth areas and companies to go after for new business leads,” he said.

Also, Eckert said: “When we work with a given client in our consulting mode, we use these projections as part of our base of information. So you could say that they have value in conversational consulting--helping us come up with answers when a client asks what the competition is probably going to be doing, or what the growth cycles are for an area.”

Other frequent users of the Chapman forecast include the county, which uses Chapman-generated numbers in several departments, and Irvine, whose city government uses the college to help massage the numbers into a 10-year projection of revenues and expenditures.

“There are even some people who use the data in their own models and generate their own forecasts,” Chapman Business School Dean James Doti said.

But by and large, most of the people who attended Thursday’s conference “are just interested in hearing the analysis,” Doti said.

“They like the fact that we center on Orange County, and they get information they might not otherwise receive,” he said. “The majority probably don’t even read the whole report, but what they do get from it makes good cocktail party conversation, and it makes people feel more knowledgeable.”

That last assessment was underscored by Scott Perley, vice president and resident manager of Coldwell Banker Commercial Real Estate in Santa Ana.

Regional economic forecasts are routinely disseminated to Coldwell Banker’s brokers, he said, “so they are not caught off guard by customers and so they can model their own business activity. We make them know that these are just opinions, but that if a single set of numbers predominates, then that will probably be what happens, because a lot of this stuff is self-fulfilling prophecy.”

Because it is such an important segment of the county’s economy, the real estate industry gets considerable attention in the Chapman forecast and in several other regional economic projections, including those issued by First Interstate Bank and Security Pacific National Bank.

Most of the regional and national forecasts issued so far this year for 1988 say that real estate development activity in Southern California, especially in commercial construction, will decline sharply next year.

But, Perley said, those predictions weren’t news to people actively involved in the industry, because people involved in selling land have been watching sales slow for some time.

Still, he said, forecasts are valuable in several areas of his business. In addition to bolstering broker knowledge, Perley said, “we use them for providing data we can cite to potential (office building) buyers about trends in the area’s economy.”