‘98 for County: Doing Great to Doing Well

Add Jack Kyser, Los Angeles’ economic guru, to the list of experts predicting slower growth for Orange County. Kyser, chief economist at the Los Angeles Economic Development Corp., recently released his midyear forecast for the five-county Southern California region.

Orange County will finish the year still in the top spot among those counties, Kyser said. For all of 1998, he expects exceptionally strong employment growth of 4.2%, or 51,200 jobs.

The bad news is that most of that growth will have occurred in the first half of the year.

“You got off to a roaring start,” he said. “Now you are seeing this moderation as you go through the year.”

Next year, he believes, job growth will slow to 2.9%, as talk of a possible national recession begins to be bandied about.

The Asian financial crisis, of course, is viewed as the main culprit in the growth slowdown, because many local companies sell their products in those hard-hit countries. But Orange County faces another long-term problem that Kyser worries is getting short shrift: the lack of available land for residential development.

Kyser is forecasting a decline in the number of residential building permits, from 12,200 in 1997 to 11,500 this year, as developers find it increasingly difficult to endure the long and expensive process of preparing raw land for new houses. “You are on the cutting edge of the looming housing affordability/availability problem that’s developing throughout California,” he warned.

Few people are paying attention to this issue, he said, in part because of the euphoria over the strong economy and the renewed appreciation in home values.

But he warned of a possible return to the conditions of the late 1980s, when high real estate prices began to stymie economic growth and deter businesses from relocating here.

“We’ve really been on a roll, but a little bit of rationality is coming back into the picture,” he said. He urged competing factions in the county, such as the forces battling over the future of the El Toro Marine Corps Air Station, to “turn down the volume on some of these disputes and work together. We have to learn to utilize our resources, and to look ahead.”