Orange County Register

Orange County is in for a tough 18 months as employers continue to cut jobs and unemployment tops 6%, say the economists at Cal State Fullerton.

The school’s annual economic forecast, presented today at a luncheon at the Irvine Hyatt, painted a grim picture ahead both for Orange County and the U.S.

Calling it a once-in-a-lifetime event, the CSUF economists blamed the problem on the upheaval in the financial system, which is radiating through the economy and sapping consumer confidence.

“Our projections indicate that the U.S. is poised for a severe and protracted economic downturn for the remainder of this year and 2009, which very likely will turn into an outright recession,” says the report. (The government announced today that the third quarter gross domestic product shrank 0.3% after rising 2.8% in the previous three months.  A recession is loosely defined as two consecutive quarters of negative growth.)

“Moreover,” continues the CSUF forecast, “Even when the economic recovery begins (an event that we place sometime in late 2009/early 2010), it will be slow and will stretch over many quarters with below trend growth and accompanied with much higher unemployment levels.”

Orange County, which is experiencing its worst job loss in 16 years, will be especially hard hit because it is losing jobs in key sectors, predicts the report. It notes that financial activities and construction, part of the backbone of Orange County’s economy, accounted for 71% of the local job losses through August of this year, says the report.

Among the other Orange County projections:

• Unemployment will average 5.3% this year and 6% in 2009
• Payroll jobs will decline 1.8% this year and 1.1% in 2009 before recovering at a rate of 1.5% in 2010
• Finance, construction and information will continue to shed jobs in 2009 while a second half recovery is expected in retail, business and professional services.
• Housing prices will continue to slide in 2009 then begin to recover but not until late 2010 and then only very slowly.

The CSUF forecast was much more pessimistic than UCLA’s, whose economists predicted on Monday that housing in Orange County will rebound next year, which will spur hiring.  UCLA, however, agreed that it will take five or six years to return to the pre-mortgage meltdown employment levels.

To purchase a copy of the full report, contact Ginny Pace, director of community affairs at CSUF’s
Mihaylo College of Business and Economics, at 714-278-2566 or by email at gpace@fullerton.edu.

Other Orange County economic news …

• O.C. pay raises half the U.S. average
• Meltdown recovery? It’s all about housing
• O.C. jobs loss continues, unemployment hits 5.8%

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