Economic Forecaster Lowers Jobs Outlook
By SHERRI CRUZ
The glass is half full.
Orange County’s economic outlook,good compared to the state’s economy,is being driven by growth in personal income and tourism.
But the state’s problems, namely workers’ compensation costs and the budget deficit, are likely to add to uncertainty for businesses and limit hiring. High housing prices and a continued loss of manufacturing jobs also are expected to drag down the economy.
That’s according to Jack Kyser, chief economist for the Los Angeles County Economic Development Corp. Kyser released his midyear regional and state economic update today.
OC nonfarm employment could grow 0.7% this year for a gain of 9,800 jobs, according to the survey. That’s down from Kyser’s October forecast for 2.3% growth or 23,200 jobs in 2003. The county’s unemployment rate is expected to be 3.7%, down from 4.1% in 2002.
The jobs forecast is slightly lower than that of Chapman University, which expects 13,000 jobs to be added in OC this year.
Kyser said higher orders for technology gear haven’t yet translated into job gains. The loss of manufacturing and technology jobs is expected to pull down the economy this year but could improve next year.
Outsourcing manufacturing to offshore companies continues to be a threat, he said. Santa Ana-based Powerwave Technologies Inc. recently cut 600 jobs after deciding to close its OC manufacturing operations and outsource the work to Asian partners.
The loss of manufacturing jobs is the equivalent of losing the middle class, Kyser said. And that’s dangerous, he said, because it restricts opportunities for the lower class to move up.
“The question is, ‘What will manufacturing be replaced by?'” he said.
Service jobs, particularly in the financial sector, are the bright spot on the jobs front. Defense and aerospace companies in Seal Beach, Huntington Beach and elsewhere should benefit from increased government spending, he said.
Meanwhile, Kyser predicts OC personal income will grow 3.5% this year, faster than last year’s 3.2% growth. Per capita income of $38,311 is the highest in the Southland.
Tourism is another positive for the OC economy. The number of overnight visitors to the county this year should hit 42 million, according to the study. Last year about 41.8 million visitors came to OC, according to CIC Research Inc.
Although travel is down nationwide, the industry is targeting promotions at the regional drive market,vacationers who take more frequent but shorter holidays near their home.
New attractions at OC theme parks, such as Disneyland’s Winnie the Pooh ride, should boost drive traffic, Kyser said.
New-home sale prices are expected to increase 8.5% to $515,215, according to the survey. Resale prices are forecast to rise 18% to $436,748.
Kyser warned that the hot housing market could deter businesses from starting up, staying or expanding in OC.
