O.C. Economy Expected to Expand in 2001; Jobs May Slow

Orange County’s economy should continue to expand next year, but rising interest rates threaten to slow job growth to its lowest level since 1995, Chapman University economists predicted Tuesday.

If correct, the forecast would mark the county’s third consecutive year of declining job growth.

“Obviously, we’re in a downdraft,” said Esmael Adibi, head of Chapman’s Anderson Center for Economic Research. “But the expansion should continue into 2001 with no signs of a recession.”

The center released a preliminary 2001 forecast Tuesday as part of an update for this year. Its final analysis for next year will come in December. The update for this year contained no significant changes.

After rising 5.3% in 1998, the county’s total payroll employment has been adding fewer jobs, largely because of losses in the high-tech manufacturing sector. On Monday, Boeing Co. continued that trend, announcing it will lay off 900 aerospace workers at its Huntington Beach plant.

This year, payroll employment is expected to rise by 3%, after last year’s 3.5% gain.

In 2001, the county is expected to add 35,000 jobs, an increase of only 2.5%, Chapman officials predicted. That’s the smallest increase since 1995, when job growth rose by 2.2%.

Adibi blamed the slowdown on rising interest rates, which have succeeded in slowing the national and local economy. He noted that the county’s job growth remains stronger than the national average, which rose 2.2% last year.

Declining job growth should also take some of the pricing pressure off the county’s real estate market.

Chapman predicted that home prices would rise by 5.4% in 2001, compared with 11.3% last year and an estimated 9% this year.