Orange County’s economy heads into 2013 with signs of momentum that might only be slowed by far-off circumstances that are well beyond local control.
Factors in favor of the sort of growth that would take the “slow” out of the ongoing economic recovery in OC include a brightening picture for real estate, general health among banks operating here, and expectations of another strong year for retail sales.
It helps that none of the other big segments of the local economy are showing any glaring or structural weaknesses, seemingly poised for a lift if the recovery picks up steam nationally.
This issue of the Business Journal offers outlooks for various segments of the local economy, starting on page 4. All of the prognostications come with the sort of general caveats offered when attempts are made to the read the future.
This year also includes some specific concerns that have the business community holding off on any outright optimism, with expectations tempered against a backdrop of unknowns. Those start with Washington’s standoff over negotiations on the federal budget and fears that intransigence could push the county over the so-called fiscal cliff.
There’s a growing sense that tax hikes on high-income individuals are inevitable and that President Barack Obama is likely to get more than half a loaf from congressional Republicans holding out against increases. And that is enough to tamp down expectations for 2013. The negotiations in Washington weren’t over as of this writing and seemed likely to drag on through the holidays—maintaining an air of uncertainty.
Then there’s the possibility that the standoff will drag into 2013, which would bring automatic tax hikes and cuts in federal spending. Either would likely cause businesses to pull back into a defensive posture right off the bat next year.
Bankers around OC are coming off a strong year, but they remain concerned about new regulations. The Dodd-Frank Act has yet to take full effect, and the recently created Consumer Financial Protection Bureau already has already caused banks, credit unions and other financial companies to tighten their business practices (see page 7).
Orange County’s base of traditional and high-tech manufacturers had a good 2012, getting a boost from the trend toward “onshoring”—work returning here from overseas. But that slowed in the second half of the year, due partly to troubles finding qualified workers (see page 8).
The plus side includes a local technology sector that could give the area an economic boost, thanks to companies here that make chips or gear for the surging mobile-device and cloud-computing segments (see page 4).
Retailers and restaurants are expected to continue gains that started with a rebound from the recession in 2010 and picked up the past two years (see pages 1 and 12).
The healthcare sector will be busy, with two of the bigger hospitals working toward a new integrated care network and another set to begin operating its own health maintenance organization (see page 10).
Several local media companies got a start on makeovers this year, with plans to continue their bids to regain standing in the marketplace next year (see page 13), which could bring new hires.
Real estate remains a fundamental driver of OC’s economy, and the outlook there makes the glass look half-full. Construction of single-family homes is heating up and apartment developments continue to roll out, while the office market shows signs of a pickup, vacancies in the industrial market remain low, and development of the first major retail project in several years has started in Buena Park, with another expected to get going in Huntington Beach next year (see stories, pages 1 and 6).
Generally, the outlook appears much stronger than anytime since the recession in strictly local terms. Now it’s a matter of seeing how developments elsewhere affect the local economy and how OC’s business community responds in 2013.
