Orange County business executives are, perhaps surprisingly, more optimistic about the local economy heading into the final three months of the year, despite higher inflation, the ongoing war in Ukraine and rising interest rates, according to economists at California State University, Fullerton.
CSUF’s quarterly Orange County Business Expectations or OCBX index rose to 63.9 for the fourth quarter, up from 59.2 at the start of the prior three-month period.
The index, part of a comprehensive survey, is still far down from the beginning of this year when it was 91 before falling to 85.3 for the second quarter.
The OCBX index—where a reading above 50 indicates a belief in future economic growth—has been on a statistical roller coaster since the pandemic hit in March 2020, when it dropped to 22.7, its lowest point since the Great Recession.
The researchers said this quarter’s upward move in the index was “somewhat of a surprise” given various global challenges.
“It may be because Orange County businesspeople feel better about their own businesses, even though they don’t feel so good about the overall economy,” said Anil Puri, who is director of CSUF’s Woods Center for Economic Analysis and Forecasting.
“Orange County businesses, I believe, are feeling in their own businesses that labor shortages and supply shortages are getting better than what we read about nationally.”
Nationally, the situation is still “serious,” Puri told the Business Journal on Oct. 4.
Warning Signs
Despite the upward blip in the OCBX index, there were several local warning signs in the overall quarterly survey results, which were released on Sept. 28.
For example, the proportion of owners, CEOs, and managers who expect overall business activity to improve fell to 20.5%, a drop of more than half from the 52% six months ago.
A little more than two-thirds of those surveyed say inflation is their No. 1 concern.
To tame inflation, the Federal Reserve has raised its funds rate, which was near zero at the start of the year, to a range between 3% and 3.25% and has indicated more increases are coming.
Over 30% of Orange County business executives expect to see the Federal Reserve’s benchmark interest rate to top 4% by the end of this year, according to the latest survey.
However, these increases have also led local business executives to fear the Federal Reserve’s aggressive hikes may cause a recession. About 42% of respondents see a recession beginning at some point next year.
Puri said that that about 850 questionaires were sent out for the OCBX and other survey questions, about 10% responded; the survey was conducted from Sept. 17-27.
Hyundai, Ingram Micro
While global markets spin various ways depending on the day’s news, there have been various bright spots locally.
For example, most Orange County automakers saw rises in sales last month.
Hyundai Motor America of Fountain Valley reported an 11% increase in year-over-year sales to 59,465 vehicles, a “best ever” September for the brand, company officials said; see this week’s Automotive Special Report for more.
Irvine-based Rivian Automotive Inc. (Nasdaq: RIVN) last week reported that it’s still on track to manufacture 25,000 electric trucks this year (see story, page 1).
Electronics distributor giant Ingram Micro Inc. in Irvine says it plans to go public, in what could be OC’s largest IPO in over a year (see story, page 1).
