O.C. Is Emerging from Recession, Experts Say : Economy: A Cal State Fullerton report predicts that county firms will add 12,000 employees in 1993.

Although not yet ready to proclaim the good news of a complete recovery, economists at Cal State Fullerton said Tuesday that Orange County appears to be crawling out of the depths of its deepest recession in decades.

But not until late next year will much change be apparent, and not for several years after that will local employment reach its pre-recession level, said Anil Puri, dean of CSUF’s economics department.

In his inaugural Orange County Economic Forecast, Puri said that, after slashing almost 56,000 jobs between July, 1990, and June, 1992, county employers probably will add about 12,000 people to their payrolls next year, most of those in the second half.

Even if the growth rate doubled and then doubled again, however, it would be mid-1995 before local employment matched the high of 1.214 million jobs achieved in June, 1990, the month before the recession officially began.

In the last recession, which lasted for 16 months in 1981 and 1982, 19,000 jobs were cut from Orange County payrolls.

The difference in this recession, Puri said, comes from structural changes in the economy that will have a long-term depressing effect on growth: permanent reductions in military and defense spending, and the restructuring of the financial-services sector in the wake of the savings and loan crisis.

In whatever recovery is to come in the next year, Puri said, the county’s hard-hit construction and tourism industries will benefit as continued low interest rates spur home sales and a low inflation rate boosts real personal incomes by about 2.5%.

Puri, who headed the forecast team as co-director of CSUF’s Institute for Economic and Environmental Studies, said he also expects to see growth in wholesale trade, commercial construction and manufacturing except in defense-related fields such as instrumentation and fabricated metal products.

Puri’s forecast was mixed for the once-lusty retailing industry that helped wean the county from its Vietnam-era dependence on defense-related manufacturing in the 1960s and 1970s. While anticipating a 3.1% overall increase in taxable sales next year, to a total of $27.8 billion, Puri said, he expects retailers to trim 8,800 jobs from the collective payrolls as a result of continued consolidation in the face of a tight economy and a significant reduction in Orange County’s once-booming population growth rate.

Hardest hit of the retailing segments, according to the CSUF forecast, will be the restaurant and tavern industries. Puri said he expects a 10% decline in gross receipts at eating and drinking establishments in the county next year as budget-conscious businesses and consumers keep tight rein on their entertainment budgets.

With Tuesday’s forecast, CSUF joined two other county universities--Chapman University and UC Irvine--that prepare annual local economic predictions.

CSUF is the first of the three to look officially at 1993. Chapman, as it has for the past 14 years, will unveil its annual forecast in December, and UCI will release its prognostications in March. But the CSUF findings are in keeping with what economists at the other schools have been saying informally in recent months about their expectations for 1993.

Attesting to the importance of the county forecasts to local businesses’ planning efforts, about 300 business executives attended the presentation on the Fullerton campus Tuesday morning.

“Basically, we are cautiously optimistic for Orange County over the next five quarters,” Puri told them.

“Nationally, this has been a painfully slow recovery so far, but signs of growth have emerged in a number of areas,” including increased production in a number of industries, low short-term interest rates and a low rate of inflation, he said.

He said CSUF economists expect the national gross domestic product--a measure of the value of goods and services produced across the nation--to increase by about 3% in 1993 and the gross Orange County product to grow by about 4.7%.

Historically, the county product grows at about twice the rate of the national product, Puri said, so the advance anticipated for 1993 indicates a weaker local recovery than after previous recessions.

But Orange County is maturing, and its economy is not ever expected to match its adolescent growth spurt of the 1970s and 1980s, analysts say.

Economic Outlook: Warily Optimistic

Economists at Cal State Fullerton are expressing guarded optimism about Orange County’s economy. Payrolls will grow next year, and the county’s gross product will rise by nearly 5%. Taxable sales are expected to increase by more than 3%. Still, the growth rate indicates a weaker recovery than after previous recessions.

Jobs: Orange County employers will probably add about 12,000 people to their payrolls next year, most of those in the second half.

‘93: 0.97

Taxable Sales: There will be a nominal increase in taxable retail sales, but inflation will offset any real effect.

‘93: 3.16

Personal Income: Personal income is expected to grow, but inflation will account for more than half the increase.

‘93: 6.02

Gross Product: Gross product is the value of all goods and services produced. In recent years, Orange County was more than twice as productive as the nation. But the county’s economic growth is now only slightly faster than that in the rest of the nation.

NATION ‘88: 3.93 ‘89: 2.53 ‘90: 0.81 ‘91: -1.16 ‘92*: 1.73 ‘93*: 2.60 *

ORANGE COUNTY ‘88: 8.94 ‘89: 6.31 ‘90: 6.07 ‘91: 1.73 ‘92*: 2.55 ‘93*: 4.24 * 1992 figures are estimates; 1993 figures are projections

Source: Institute for Economic and Environmental Studies, Cal State Fullerton