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| Press Release |
UCLA Anderson Forecast: Gloomy Outlook for Orange County Economy
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Orange County, October 27, 2008 - The economic outlook for California and Orange
County has become more pessimistic over the last few weeks according to the latest UCLA
Anderson Forecast for Orange County. The Forecast was presented today in Irvine, California,
before hundreds of leaders in the business community.
In its annual economic forecast for Orange County, the Forecast projects the U.S. and state
economies will move in tandem over the next few years, with income and employment deteriorating
further before the housing market hits bottom.
“Our forecast for slow growth in the 4th quarter was dependent upon consumer demand holding up.
The consumer is now uncertain about the effect of current economic policy and is pulling back.
Consequently, economic growth projected for the current quarter in California is not going to
occur,” said Jerry Nickelsburg, senior economist, UCLA Anderson Forecast, who authored the
California Report. “Moreover, the shrinkage in the mortgage finance market in Orange County
creates a deep hole in Orange County employment, and history tells us it will be a five to six
year process to fill it in with new jobs.”
“The real estate sector begins its recovery next year as home sales pick up beginning in the
second quarter of 2009 and home prices stabilize in the summer,” the Forecast says. In
non-residential real estate, office markets will remain weak and higher vacancy rates will
persist. There is no change predicted in industrial space market conditions. With the
continued decline in the number of jobs in Orange County, investment in non-residential
structures will remain at low levels in 2009. New residential investment, particularly in
multi-family housing will rise moderately in 2009.
Since labor markets are continuing to weaken, the adjustment process will continue over the
next six months, but employment will begin to make a modest comeback in late 2009, with finance,
retail and housing labor markets having suffered the most. The Forecast predicts that non-farm
job growth rises to 1.1% percent in 2010 and 1.5 percent in 2011. Higher paying jobs in the
professional services, information, government and healthcare sectors contribute to positive
growth in average salaries. Also remaining stable and perhaps strengthening on the employment
side is the leisure and hospitality sector, education, professional services, natural resources,
and local government.
The UCLA Anderson Forecast for Orange County also states that population growth remains positive,
averaging 0.7 to 1.0 percent per year over the next 3 years. A small increase in birthing due
to the rise in fertility population and net-migration turns positive in 2010 as labor markets create
more jobs.
“Inflation in Southern California declines in 2009 and 2010. The absence of housing price
appreciation, a slowdown in rental rate appreciation, weaker U.S. economic growth, and declining
energy prices will relieve pressure on the general price level, both regionally and nationwide,”
states the Forecast report.
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Quarterly forecast still available for purchase
--please call forecast
office directly to place your order 310-825-1623
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