Orange County's economy will continue to experience a slowdown in 2009, but some economic sectors are withstanding the downturn, UCLA economists said Monday.
Unemployment is 5.7 percent, lower than both the state and the nation, and it appears the main job contraction has passed, while existing home sales in Orange County are up sharply over the last several months, according to Mark Schniepp, director of the California Economic Forecast in the sixth annual Orange County Economic Outlook produced by UCLA's Anderson School of
Management.
The report is is to be presented at the Hyatt Regency Irvine around 10 a.m. in a conference attended by Schniepp; Patrick Lawler, chief economist of the Federal Housing Finance Agency, the conservator of Fannie Mae and Freddy Mac; and economist Jerry Nickelsburg.
The focus is on the short- and long-term business, employment and real estate forecasts for the nation, California and Orange County. Impacts of the Wall Street turmoil on the economy, forecasts for the job market and the possibility of a deep recession will be discussed.
According to Schniepp, unemployment in some areas of Orange County is on the rise, but aside from the current problems in real estate, the tourist sector remains stable, and professional, scientific and technical employment is largely unaffected. Healthcare and education sectors are still adding jobs, Schniepp said.
The severe recession in the housing sector is expected to continue. The main resulting job loss is concentrated in three sectors: construction, finance and temporary employment services, Schniepp said.
Home values will continue to weaken for the remainder of this year, stabilizing next year as foreclosures subside, and labor markets will show substantially less job hemorrhaging, he said.
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Overall, the 2009 outlook for Orange County is more positive than the current economic reality, which clearly remains both weak and uncertain, Schniepp said.
The California economy, according to Jerry Nickelsburg, will muddle along, with little good news for the balance of this year and into next year.
The turning point for the slowdown in growth depends critically on when bottom will be reached in construction and finance, he said.
The U.S. economy is experiencing something that is unprecedented, Nickelsburg said in an executive summary of the report. It is not the severity of the sectoral downturns -- there have been financial panics before and many have been more serious -- but sectoral corrections are not happening all at once, he said.
"We are experiencing serial adjustments in sectoral imbalances which have slowed growth almost completely and which will not have enough energy to snap back with normal growth anytime soon," according to Nickelsburg.
In their U.S. forecast update, the UCLA economists said the major risk facing the economy revolves around whether the consumer will buckle under the weight of falling house prices, high energy prices and tepid wage growth. The forecast for the nation is that consumer spending will hold up sufficiently well to avoid recession, but it will be a close call.
