O.C. Should Be Able to Avoid Recession

Weaker job growth next year in California and Orange County will lead to higher unemployment and stifle demand for housing, mainly in the higher-end market, Chapman University officials said Wednesday in presenting their annual economic outlook.

But the county and state should be able to avoid the recession that has gripped the rest of the nation and should start to turn the corner by mid-2002, the economists said.

“We’re still going to be facing bad news for the next quarter or two,” said Esmael Adibi, an economics professor who heads the university’s Center for Economic Research. “Job growth will not be enough to reduce the jobless rate because the overall labor force is growing faster.”

With the Silicon Valley high-tech area mired in recession, the state will add only 54,000 jobs next year, a hike of 0.4%. Orange County, economically the strongest in Southern California, will add only about 15,700 jobs, a 1.1% increase--the lowest since the county was working out of the recession in 1993, the Chapman forecast said.

San Diego County and the Inland Empire counties will join Orange County to provide the bulk of the state’s job growth. Los Angeles County will lose jobs, as will Santa Clara, San Francisco and Alameda counties, Adibi said.

With weak job growth, unemployment should reach 6.1% statewide and 3.9% in Orange County. The jobless rate stood at 5.4% statewide and 3.4% in the county in October. Yet, in terms of job growth and unemployment, the state and the region should do better than the nation as a whole next year, Adibi said. The nationwide jobless rate is will climb as high as 6.5% next year, he predicted.

To drive the economy forward, the Chapman economists are looking mainly to consumers, and don’t like what they see.

“We’re relying on consumer spending to drive the economy, but there’s not a whole lot of oomph there,” said Chapman President James L. Doti, who previously headed the annual review.

Another major terrorist attack could curtail consumer spending more and push the state into recession and the county close to it, he said.

To forecast a recession, Chapman would have to see two consecutive quarters of job losses, and that isn’t in the cards for the county, the region or the state next year, Adibi said.

The state will lose 0.4% of its jobs during the first three months--the first quarterly loss since the last recession a decade ago--but should start to recover slowly after that, according to the Chapman report. Though Orange County will continue to add jobs, it will be at a much slower rate than the 3%-plus pace that it has enjoyed in recent years.

Weaker job growth also should lessen demand for housing statewide, and the median sales price statewide will increase only 1.2% next year, report says. The median-price increases have ranged from 4.2% to 12.7% during the last five years.