Experts Call O.C. Outlook Brightest in Recent Years : Economy: Panel’s annual forecast says recovery won’t come soon. But its audience was glad to hear a note of optimism.
The forecast doesn’t promise a quick recovery, but a panel of economists said Wednesday that the outlook for Orange County’s economy is the best it has been in years.
Key to a cure for the malaise that has kept the entire Southern California region mired in recession since mid-1990 is creation of new jobs.
To do that, however, will require a level of cooperation between business and government usually rejected by the county’s entrepreneurial business community, panelists told a gathering of about 750 local executives and political leaders at the 31st annual Orange County Economic Outlook Conference.
The audience was looking for an upbeat message after several years of grim forecasts at the event, sponsored by the county Chamber of Commerce and Industry.
And at least some of them got what they came for.
“It seemed to be more optimistic than last year,” said audience member Bob Schur, executive vice president of California Dental Health Plan. “I think the slide has stopped.” As usual, the best-attended session featured a panel of economists forecasting the global, national and local outlooks.
Chapman University President James L. Doti, a fixture at the yearly conference because of his predictions on Orange County’s economy, said he now believes that area job losses will halt by early 1994. After that, Doti said, businesses can expect “positive employment growth, albeit at a slow pace.”
Doti, an economist by training, said he believes that federal defense cuts will continue to take a major toll on aerospace and defense employment in Orange County and throughout the state for the next three to four years. County payrolls have been pared by more than 100,000 jobs since 1990.
But slight recoveries in wholesale and retail trade, some technological fields and even residential construction should more than offset the defense cuts, Doti said.
One wild card is the anticipated shakeout from massive changes planned for the nation’s health care system.
Some health industry insiders expect little change in employment in Orange County. Hiring by managed care firms and health maintenance organizations is likely to be offset by anticipated layoffs among medical equipment and drug manufacturers and hospitals.
Others, however, predict sizable staff cuts.
Terry Hartshorn, president of one of Southern California’s largest HMO operators, UniHealth, said he believes President Clinton’s health care reform effort could lead to severe job losses in Orange County as it squeezes waste out of the system.
Some local pharmaceutical makers, he said, are already reducing their staffs in anticipation of reform. And those cuts are often in research, meaning fewer new drugs will be on the market in several years and that not as many high-paying research jobs will be available in this former Orange County growth industry.
Hartshorn said he thinks the Clinton plan is “on the right road,” but that it needs stronger tax incentives. He argued that market forces, rather than government regulations, should be used to hold down medical insurance costs.
During the half-day program, speaker after speaker pounded home a similar message: The global, national and local economies are undergoing their most fundamental changes in 50 years. The survivors will be those who learn to play under a new and still unformed set of rules.
Today’s businesses must cope in a world after the collapse of the Soviet Union; German unification; increasing trade and business connections among the North, Central and South American nations--with or without passage of the controversial North American Free Trade Agreement; and a shifting of the local economy away from its roots in defense and construction.
Times staff writer Chris Woodyard contributed to this report.
‘This state and this country were on cruise control for 30 years.’
J. ROBERT FLUOR, Chairman, Partnership 2010, and Fluor Corp. vice president for corporate relations
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‘Business must provide the leadership if we are to move forward.’
KENNETH MOORE, President, Orange County Chamber of Commerce and Industry
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‘We need to pull together the leadership, and in Orange County that’s no easy task.’
TIMOTHY COOLEY, President, Partnership 2010
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‘It is difficult to distinguish between global and local economics (because) they are so intertwined.’
RICHARD BERNER, Chief economist, Mellon Bank
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‘The local economy is dramatically, systemically and fundamentally changing.’
LOUIS MASOTTI, Professor of management and urban development, UCI
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‘The rules of the game have changed, and we all are groping a bit.’
LESLIE APPLETON-YOUNG, Chief economist, California Assn. of Realtors
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‘It is refreshing to come (from Washington) and drive past the Matterhorn and Fantasyland and know that the real model for our government is out here.’
MARTIN REGALIA, Chief economist, U.S. Chamber of Commerce
O.C. Forecast: a Little Brighter
An economic forecast from Chapman University indicates a slightly brighter future for Orange County than the past three years.
Employment Trends
The university’s index--or Indicator Series--predicts employment growth in Orange County. How it compares to the actual employment trend, in percent change:
1993 3rd qtr.:
Employment: -1.1%
1994 2nd qtr.:
Chapman index: 2.3%
Note: The Chapman index is the weighted averages of changes in the U.S. gross domestic product, international trade, defense spending and Orange County building permit values.
Defense Orders
Declines of 10% to 15% in defense orders in the United States will continue to slow the county’s economic recovery. Percent change:
1994 2nd qtr.*: -12.1%
* Projection
Value of Building Permits
The value of building permits will continue to decline, but at a slower rate. Percent change:
1994 2nd qtr.*: -1.2%
* Projection
Source: Chapman University Center for Economic Research
