Better Jobs Picture for ‘93, Economists Say : Outlook: Chapman forecasters warn that county employment growth could drop in 1994.

The number of jobs created in Orange County will grow slightly during the second half of this year, but 1994 could bring yet another downturn in employment growth, according to an updated economic forecast released Thursday by Chapman University economists.

The loss of jobs will be driven by continued defense spending cuts and an anticipated slowdown in the county’s robust export and import business, said Chapman President James Doti and Esmael Adibi, director of Chapman’s Center for Economic Research.

Slower growth in the export-import sector will be especially painful because international trade “has been a major engine of economic growth” during the recent slowdown, Doti said.

At a Thursday conference at Chapman in Orange, Doti and Adibi fine-tuned the research center’s December forecast for 1993. Thursday’s update was “virtually the same as our (previous) forecast,” Doti said.

In December, Chapman economists predicted that job losses during the first half of 1993 would be balanced by a gradual increase in employment later in the year. Doti described the resulting “flat” employment rate for 1993 as a positive sign, given dramatic job losses during 1991 and 1992.

But “things are a bit more ominous going into 1994,” Doti said. “There are clouds on the horizon. . . . Employment growth in Orange County may stall and, at the worst, begin to fall back.”

The economic recovery package now being assembled in Washington will have a dramatic effect on Southern California employment levels, Doti said. Proposed income-tax increases now under discussion are “confiscatory . . . and inflationary . . . and will have a significant impact on small business,” which generates the bulk of Orange County’s new jobs, he said.

While local productivity rates continue to rise, there are no corresponding signs of job creation, Doti said. Instead of hiring workers, wary employers are asking existing employees to work overtime or are signing on part-time help.

That trend toward additional overtime and part-time workers could be exacerbated if federal officials increase income-tax rates and force businesses to pay higher health care bills, Doti said. “To get a significant recovery we have to get more job creation, . . . but employers are just digging in their heels and waiting.”

Doti and Adibi predicted that resale housing prices in Orange County will continue to slide for the rest of this year. Yet, despite those decreases and lower interest rates, housing affordability will not improve, the economists said, because family incomes are slipping.

After meeting with local business leaders in Orange County on Thursday, Doti and Adibi traveled to Riverside to present their second annual Inland Empire forecast. They will offer their first forecast for Los Angeles County today.

Employment on Hold

Though Orange County will not lose as many jobs this year as it did in 1991 and 1992, neither will it end the year with a gain. Jobs created or lost - projection for ‘93, -0.7

Source: Champan University