O.C. Is Expected to Add 10,000 Jobs This Year : Economy: New forecast is much higher than earlier ones. High-tech and medical product exports credited.
Encouraged by strong overseas sales of their high-technology and medical products, Orange County employers likely will add 10,000 jobs to their payrolls this year, according to a Chapman University report released Thursday.
That employment increase plus higher-than-expected levels of consumer and business spending in the first months of the year led university economists to predict far more dramatic 1994 growth for the county than they had forecast in December.
“This reinforces a lot of other positive news we’ve been hearing,” said Tom Wilck, chairman of the county Chamber of Commerce and Industry. “Orange County is going to be one of the hot spots in the country. The momentum is with us.”
Though the aerospace industry is still reeling from defense spending cuts and massive layoffs, and while Orange County businesses have slashed more than 50,000 jobs since the recession began in 1990, the Chapman Center for Economic Research said in its midyear report that the county will likely end 1994 well into a recovery.
James Doti, the university’s president and chief economic forecaster, also predicted that taxable retail sales and housing sales--both strong indicators of consumer confidence--will show appreciable growth.
In contrast with the healthy employment growth now projected in Orange County, the Chapman report said, Los Angeles County employers are expected to slash almost 30,000 jobs from their payrolls this year, said Chapman economist Esmael Adibi.
Adibi also said the construction industry in Los Angeles is not likely to enjoy a “mini boom” like the one that seems to be starting in Orange County. Average home prices in Los Angeles County, he predicted, will decline 3.3%--the fourth annual decrease in a row. The value of building projects started in Los Angeles County this year will fall almost 5% to $3.9 billion, Adibi predicted, down from $4.1 billion for 1993.
The research center is predicting a 17.8% increase in building permit values in Orange County this year--to $1.9 billion from $1.6 billion. The entire increase, Doti said, will come from increased home building. Pent-up demand for housing after the minimal construction activity of the recession, he predicted, will nearly double housing production to about 13,000 units a year through the end of the decade.
Adibi said he expects about 9,800 jobs to be added this year in the Inland Empire--where locally based employment remained constant during the recession. But construction in Riverside and San Bernardino counties will remain weak through the rest of the 1994, he predicted, and home prices are likely to drop 2.5% after a 4.6% average decline last year.
Except for its emphasis on improvement in Orange County economy, the Chapman midyear report is quite similar to a statewide study issued earlier this week by the UCLA Business Forecasting Project.
In both the UCLA and Chapman reports, economists say that California’s economic recovery is underway but is being held back by short-term interest rate increases and continuing layoffs in the aerospace industry. Chapman’s Doti, however, disagrees with UCLA forecasters who say that income losses because of January’s Northridge earthquake are holding back growth.
There have been income losses, Doti said, “but the spending that will result from the rebuilding effort will make up for them. The spending to come is going to be a positive influence on the recovery.”
Neither school, however, is optimistic about the likelihood of a big economic boom any time soon. UCLA forecasters said that, though they expect the gross domestic product--a key measure of economic growth--to increase by 3.9% this year, they think the growth rate will slow in 1995 to just 2.3%.
Chapman economists were slightly more pessimistic, calling for GDP growth of 3.6% this year, slowing to 2% for 1995.
“It’s premature to try to evaluate whether we’re heading into another national recession in 1996,” Doti said Thursday, “but we will have a significant slowdown in 1995.”
Orange County’s Slow Climb
The Chapman Indicator Series uses the nation’s GDP and foreign trade balance along with local defense and construction spending to predict Orange County’s non-agricultural employment levels. Percentage change in county employment and indicator series. Figures show change from the same quarter of previous year:
4 quarter, 1994* Chapman indicator: 3.4% Employment: 1.9%
* Projection
Source: Center for Economic Research; Researched by JANICE L. JONES / Los Angeles Times
