Expect to see a sluggish national economy through much of next year, while Orange County’s growth will be stunted by the downturn in the area’s real estate market, economists from the UCLA Anderson School of Management said on Monday.
UCLA Anderson’s 2008 economic forecast is predicting California’s job growth will be less than 1% through the third quarter of next year, and less than 2% through the end of 2009. Unemployment is expected to peak at 6% by the end of 2008.
“We’re floating dangerously close to a recession,” economist Ryan Ratcliff said.
Speakers at the event said while the county’s economy should remain slow next year, it’s not likely to technically go into recession.
Local business leaders surveyed by the Anderson school predict a soft local office market through 2010, although rental rates are expected to increase moderately.
“This is a weak market. It will be weak for the next three years,” said economist Jerry Nickelsburg.
As for the housing sector, speakers at the event expect to see home prices fall by nearly 15%, and for sales to remain slow until at least 2009. On the upside, defaults could show signs of slowing later next year.
“It will seem like a recession (here) if you are related to residential real estate,” said Mark Schniepp, director of the economic forecast.
Nationally, gross domestic product is expected to stall at 1% through the first quarter of next year, but then will increase to a normal 3% growth rate by the end of 2008.
The economic outlook event took place Monday morning at the Hyatt Regency Irvine, and was sponsored by the Irvine office of law firm Allen Matkins.