Consulting Firm Predicts Strong Growth for County
Another upbeat report on Orange County’s economy projects continued growth well into the next century.
Regional Financial Associates, a research and consulting firm in West Chester, Pa., forecasts a strong 3.9% increase in countywide employment this year, to 1.28 million. That will be followed by average annual gains of about 2% for the next five years, well exceeding the 1.3% average rate for the nation, it predicts. The county’s unemployment rate is expected to remain about 3%, compared to the U.S. rate of about 5%.
The firm’s economists also expect the county to fare better than the rest of the nation in the growth of personal income, salaries and retail sales. Increases in personal bankruptcies, which have outpaced the rest of the country during the past few years, will fall well below the national rate, they project.
The report also issued some warnings. During the short term, the crisis in Asian financial markets still could have a negative effect on the county’s growth. The biggest long-term concerns are the relatively high business costs and low housing affordability, it said.
Regional Financial ranks Orange County as the 18th-highest cost area for businesses out of 100 metropolitan regions nationwide. And the median household income in the county is sufficient to purchase only 90% of the median-priced existing home at current mortgage rates. That compares with 125% nationwide.
High costs, particularly for housing, will be “the No. 1 problem for Orange County over the next several years,” said Mark Zandi, Regional Financial’s chief economist. Already, he noted, housing prices in the county are very near their pre-recession peak. With double-digit price gains expected this year, they’ll soon surpass their previous highs.
A lack of affordable housing, combined with the very tight labor market, will soon start to bite into growth, he believes. “Another year or two of this very strong growth,” Zandi said, “and this economy will be struggling with its own success.”
Patrice Apodaca covers economic issues for The Times. She can be reached at (714) 966-5979 and at patrice.apodaca@latimes.com
