One Year After Bankruptcy, O.C. Economy Has Regained Rosiness
A year after its bankruptcy filing cast a pall over the region, Orange County has emerged in its best economic shape in years.
The prosperity can be read in the bottom line of many companies as well as in personal observations and an accumulation of economic data released in the last few weeks.
The county’s jobless rate of 4% in December was the lowest in five years and the lowest in Southern California. Business executives are more confident than at any other time since 1986, according to UC Irvine’s annual executive survey released Tuesday. Hotel occupancy is at a five-year high. And Orange County’s long-sluggish real estate market finally appears to be coming around.
Home sales are climbing, and commercial developers and investors are buying properties again as office vacancy rates have dropped and rents have begun to rise. Major corporations such as Fluor Corp. are looking for more space. Builders are even talking about erecting “spec” properties, which the county hasn’t seen this decade.
The Orange County economy--which, until the bankruptcy filing, outperformed those of neighboring counties--appears to be regaining its regional prominence in commercial and residential real estate and in job growth.
The major trouble spot is the consumer. Many households in the region, faced with rising personal debts and stagnant wages, have yet to share the fruits of the recovery. And until they do, car dealerships and other retailers aren’t likely to see a resurgence of sales.
Tony Cherbak, a partner at Deloitte & Touche in Costa Mesa who specializes in retail, thinks that has created a sort of split economy at the moment, with jubilant corporate executives on the one hand and ho-hum consumers on the other. But Cherbak and others believe that if current economic trends continue, consumer confidence and spending will catch up.
“The overall mood of the economy is more upbeat,” said Joe Stafford, chief financial officer at Viking Components, a Laguna Hills maker of computer memory products. He added, “We’re hiring people left and right.”
Kuntz Manufacturing Co. in Santa Ana makes automated equipment for other manufacturers, and as such has a finger on Orange County’s economic pulse. Kuntz struggled during the recession, but in 1994 business slowly began to recover, then plodded along until the last few months, when it took off.
“This year has started off to be a banner year,” said Roger Kuntz, the company’s vice president.
Like Kuntz Manufacturing, many companies in Orange County are in their best financial condition in years. Besides benefiting from low interest rates and surging stock prices, many local firms have restructured during the recession, and others have found new markets or expanded overseas.
The county has more than its share of firms tied to industries that are growing, such as international trade, tourism and engineering management services.
“That’s one of the real bright spots in the Orange County economy,” said Chris Taylor, an economist with Wells Fargo Bank in San Francisco.
For all of this optimism, however, the local economy has yet to regain the luster of its heyday.
Manufacturing employment, though it appears to have bottomed out, is still 50,000 jobs shy of its peak in 1988. Home values have yet to begin climbing again. And not everyone is quite ready to declare that the shroud of the county’s bankruptcy has lifted.
As Newport Beach economist Walter Hahn put it: “As long as we don’t have some kind of blowup in the bankruptcy recovery plan, I think things are returning to normal.”
