County Flirts With First Year of Jobs Losses in a Decade
By RAJIV VYAS
Orange County still could eek out a small rise in jobs for 2002 but now the county’s flirting with its first annual employment decline in nearly a decade, economists say.
Most economists say OC is on track to lose jobs for the second half of the year, upping the odds that OC could see a net loss for the entire year.
“The probability that we would have a negative year is less than 30%,” said Esmael Adibi, director of the school of business and economics at Chapman University.
A year of job losses would bring OC in line with the state and the nation, which are on track to lose jobs in 2002. A down year would be the county’s first since 1993.
Last year, Chapman forecast that OC’s payroll would increase by 1.1% in 2002, or by about 15,700 jobs. Adibi now says OC will be lucky to add 7,000 jobs this year.
Last November, economists at California State University, Fullerton, projected OC’s employment would grow by 1.6%, or some 23,000 positions.
Anil Puri, Cal State Fullerton’s business school dean, now says OC could narrowly escape a job contraction this year. Last week, Puri revised his 2002 forecast to about 3,400 new jobs, a 0.2% growth rate.
“We ran into Enron and other stuff like a possible war with Iraq,” Puri said. “Our forecast was very accurate for the first half of this year.”
Cal State Fullerton also forecasts a decline in jobs for the second half.
“Year to date, the nonfarm growth rate for OC is 0.48%,very close to zero,” said Mark Schniepp, director of California Economic Forecast, a Santa Barbara economic consulting firm.
“The probability that negative growth would occur this year is small. But it is a possibility if the labor markets do not make any progress.”
The shifting sentiment comes after two months of yearly job losses in August and September,4,400 job cuts in all. Whether OC loses jobs for the year hinges on the fourth quarter.
November and December are key months for retail jobs,a growth area in the past year. Last year, retail jobs rose by 5,500 in November.
But OC faces a tough comparison: last year’s retail jobs total was 256,100, a record.
Consumer spending is a variable.
If spending fails to pick up for the holidays, OC could see a steeper decline in the fourth quarter than it did in August and September.
“A lot depends on what happens in retail and travel and tourism,” said Jack Kyser, chief economist with the Los Angeles County Economic Development Corp. “But the year is going to be very much weaker than anybody had imagined.”
Kyser said he puts the probability of a jobs contraction this year at 25%. What baffles him, he said, is retail job losses: the sector shed 900 jobs in August and 1,500 in September.
“There have been a lot of demographic changes in Orange County that would impact the spending pattern, but that is not what is causing the decline in retail jobs,” said Tom Lieser, senior economist at the University of California, Los Angeles. “This decline would indicate some deterioration in the local economy.”
Until recently, retail was one of OC’s strong points, along with government, construction and business services.
By contrast, manufacturing has lost jobs for each of the past 18 months.
In August and September, 4,900 jobs were lost in the sector. In the past two years, 13,300 manufacturing jobs were shed.
“We had expected manufacturing to level off by midyear. It did not do as well,” Chapman’s Adibi said.
Even job growth in services has been weaker than Chapman expected a year ago, he said.
Services added 500 jobs in August and 800 jobs in September. That’s down from 6,300 jobs in August 2001 and 3,000 jobs in September a year ago.
In the first half, OC added around 10,800 jobs. But even those numbers aren’t safe.
The state Employment Development Department revises the county’s job numbers upwards or downwards every year. The revision for 2002 is likely to be in March, economists said.
“The revision in jobs numbers is going to be fascinating as they could be on the downside,” said G.U. Krueger, economist at Irvine-based Institutional Housing Partners.
