Orange County employment will make a strong comeback next year, while home building will pick up along with tourism and hospitality, but the creation of higher-paying jobs remains a key challenge for the region, according to Chapman University economists led by President Emeritus Jim Doti.
Nationally, the Chapman economists forecast that the U.S. economy will expand 5.7% next year, recovering from a once-unthinkable 3.1% decrease in 2020.
By the end of 2021, the level of real GDP will be almost 4% higher than the pre-COVID-19 level.
“The COVID-19 recession hit Orange County harder than California,” Doti and his team said in their annual forecast.
Orange County’s greater dependence on tourism versus other California counties led to a sharper decline in local job growth, they noted, while emphasizing the need to boost tech-oriented innovation.
The Chapman report, presented virtually last week, offered plenty for optimists betting on an economic recovery aided by the coronavirus vaccine and an end to the pandemic:
• Payroll employment in the county is forecast to increase 2.6% in 2021, after this year’s 8.6% drop.
• There will be 72,000 more people employed in OC at the end of next year than there are today.
• OC housing appreciation in 2021 will continue, with median prices for existing single-family homes increasing by 4.4%.
• The volume of local sales of existing single-family homes and condos will fall 9.3% this year, but bounce back 12.4% next year on an annual basis.
• Total residential building permits here will fall 39.1% this year, but rise 38% next year.
“The pandemic revealed Orange County’s greater exposure to downdrafts in tourism and the leisure and hospitality jobs sector,” the Chapman economists said. “But COVID-19 will eventually become a memory, a very bad one to be sure, but one that will eventually go away. When that happens, tourism will come back.”
“That, however, won’t cure slower relative growth in the county’s creation of higher value-added jobs that command higher salaries and incomes,” they added.
The OC unadjusted unemployment rate stood at 6.4% in November, state data said last week, dropping further from the 14.7% high in May.
“Helping fuel the economy in Orange County is a turnaround in residential construction activity,” the Chapman team said.
As for overall price increases, Doti said one equation “suggests that inflation won’t show its face until late 2021 or early 2022.” Personal income growth in OC will stay steady next year on an annual basis, due to the extra support in this year’s stimulus packages.
Statewide, Chapman said the researchers calculated that the strict lockdowns implemented by California saved approximately 6,600 lives.
More than 21,000 people in California, and about 1,700 people in OC, have died due to COVID, according to state data.
The Doti team also introduced the Chapman-UCI Innovation Indicator, which tracks job growth rates, wages and “innovation establishments” in 22 tech-oriented counties and metropolitan across the nation. The gauge covers a wide range of areas including IT, software, robotics, chemical manufacturing and aerospace.
At the start of 2018, Orange County ranked 13th out of the 22 innovation hubs, but dropped to 14th place in the second quarter of this year as the Indicator pointed to slower growth in attracting innovation establishments and jobs.
“If Orange County is ultimately to become successful in innovation, we need to recognize that we’re in a competitive battle with other innovation areas to attract human and investment capital. We need to look at this the way any successful business looks at competition in its own competitive arena,” Doti and his team said.