Job Growth Forecast for O.C. Through End of Decade

By JAMES S. GRANELLI

Oct. 23, 1996 12 AM PT

TIMES STAFF WRITER

FULLERTON —

With the recession all but history, Orange County will continue to reap solid gains in its labor force through the end of the decade, economists at Cal State Fullerton predicted Tuesday.

Strong employment gains--129,300 new jobs over the next four years--should spur personal incomes and retail spending to increase 6% a year, according to the fifth annual Orange County economic forecast by the school’s Institute for Economic and Environmental Studies.

The study also noted that Los Angeles County, which is experiencing negligible growth this year, is expected to see little or no increase in jobs next year.

Orange County’s job growth and the “healthy increase” in income and spending will help its economy outstrip regional and national growth rates in the coming years, said Anil Puri, the institute’s director.

“For the first time in seven years, Orange County’s economy is showing sustained growth and staying power this year,” said Puri, who also heads the university’s Economics Department.

The county’s rate of job increases also is outstripping Southern California’s and the nation’s and will continue to do better, he said. Next year, the number of county jobs will rise 2.4%, while Southern California employment increases 1.9% and the national rate goes up 1.8%, the institute predicts.

Despite Orange County’s rosy prospects, the Cal State institute has tracked mounting differences between the northern and southern sections of the county.

While the developing South County has been attracting high-technology companies and higher-paying jobs, the more established North County has been rocked by defense industry cutbacks.

Using state data available only through mid-1995, the institute found that federal defense cutbacks and the 1990 recession caused more job losses in North County, site of the once formidable Hughes Aircraft ground systems complex, than in South County.

Worse, Puri noted, the average wage in North County has fallen. Five years ago, it was 97.3% of South County’s average wage, but that gap gradually widened. By last year, wages in the north had dropped to 93.5% of South County wages.

“That’s a trend that is consistent with what we’ve seen,” said Sheri Cameron, director of research for CB Commercial Real Estate Group Inc. in Newport Beach. “And I see nothing to interfere with that trend in the future.”

In addition to South County’s long-touted quality of life, there are now toll roads to not only ease commutes but also attract corporations to the pricey but open land there.

What it means, she said, is that Orange County boosters who develop a strategy to bring companies and jobs to the county will need different marketing plans for the various communities.

Overall, Cal State’s institute projects job growth of 2.4%, or 29,000 new jobs, next year. Over the following three years, it estimates growth rates of 2.2% to 3.4% a year, adding an average of 33,000 jobs annually.

That growth comes after the county this year recovered all job losses since the start of the recession in 1990.

The institute figures that the services sector will be the fastest-growing, partly as a result of Disneyland’s planned expansion. Service jobs are expected to grow 4.4% next year and 5.3% to 6.1% in each of the following three years.

Construction, picking up the slack from the disastrous real estate market of the early 1990s, should grow 3.4% next year and 3.5% to 5.7% thereafter. Transportation and utilities should see job increases of 3% to 3.5% over the next four years.

International trade, the engine that some say should be pulling the county’s economy, is expected to spur the wholesale trade sector’s growth 3.7% next year and 2.1% to 5.2% in the succeeding three years.

“The Orange County economy should be doing better than the regional and national economies, as long as the nation doesn’t go into a sharp downturn,” Puri said.

In fact, he pointed out, the nation’s economy already is slowing down, and that could slow down the county’s growth in the next few months. The slowdown, though, won’t be enough to stop the Federal Reserve Board from raising interest rates soon, he said.

“The Fed will be forced into raising interest rates, and that will have a dampening effect on the Orange County economy by late 1997, early 1998,” Puri said.

However, Chapman University economist Esmael Adibi doesn’t believe interest rates will be hiked any time soon because of the national slowdown.

While Southern California was weathering a long recession in the first half of the 1990s, the rest of the nation was recovering. That recovery now is 5 years old, Adibi said, and a business slowdown usually occurs every five years.

“If there’s a national recession, then, of course, we’re not going to be protected in our job formation,” he said. Absent that, however, he agrees with Puri that the county should enjoy greater growth than either the region or the nation.

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Steady Growth Ahead

Orange County’s economy will continue to grow through the end of the century. Driven by job growth, both personal income and taxable sales will continue their upward trend. The number and value of housing starts are also projected to increase through the end of next year.

Payroll Employment

(in thousands)

2000: 1,305

Personal Income

(in billions, not adjusted for inflation)

2000: $91.4

Taxable Sales

(in billions, not adjusted for inflation)

2000: $40.0

Housing Starts

Value in billions

$1.62