Job growth is predicted

A sustained but weak recovery was projected for Orange County, and the nation in 2010, at Chapman University’s annual Economic Forecast conference Tuesday in Costa Mesa.

Chapman University’s Jim Doti and Esmael Adibi forecasted positive job growth by mid-2010; no significant change in income when adjusted for inflation; lackluster improvement in consumer spending; and a “gloomy” state budget outlook.

They also anticipate that median home prices countywide have bottomed out, following a sharp decline during the recession. Prices have gone back up about 11% since the recovery began, statistics indicated. Chapman forecasters predict that home prices will climb as much as 5% in the next fiscal year.

The recession as determined by job losses is forecasted to last 38 months, and is expected to end in June.

The annual conference has been held for 32 years, and its forecasts historically have been on par with trends.

Each year’s event offers annual updates on consumer spending, interest rates, employment, housing and GDP, given by the university’s Gary Anderson Economic Research Center.

Orange County, a nexus of the construction and mortgage industries, saw payroll declines because of those industries’ meltdowns.

The strongest sectors in Orange County include education and health care; professional and business services (which include temporary employees); and leisure and hospitality. The weakest was construction.

The county has lost 25% of its payroll construction jobs since the start of the recession, and only the private education and health-care industries saw an uptick in employment.

“The bad news is, yes, we’re going to lose jobs. The good news is, yes, but only the first half of the year,” said Adibi, director of the research center.

Construction spending is still expected to be low in the coming years; although residential real estate is on the upswing, the commercial market is still depressed.

“No one will build much, and that’s bad,” Adibi said.

The experts do not predict a “double-dip” recession, in which indicators take a tumble for the second time shortly after the beginning of a recovery.

The only likely reasons a double dip could occur would be if the value of the dollar plummets, they said, or if there were a major international incident.

Doti, Chapman University’s president, said he predicted low inflation at least through 2010 — and hopefully later.

Doti also gave an update on what he half-jokingly calls the Doti Law, that any time a Democratic president is elected to succeed a Republican, the market always increases more than vice-versa.

After President Obama’s election, it now stands that the S&P; 500 Index has, since the 1930s, gained an average of 25.2% in the year after a Democrat’s election.

Any time a Republican has succeeded a Democrat as president, the index has risen about 10%.

He also saw increases of about 14% in the following year, and expects such significant gains again.

“Call your broker; buy, buy,” he joked.

Did You Know?

 A family earning the median income in Orange County in 2001 needed to spend 30% of their income on their mortgage, if they wanted to buy a median-priced home.

 By 2006, that amount spiked to 48.4%, meaning nearly half of an average family’s income would be used to pay for their average home.

 But by the end of 2009, that mortgage will be less expensive than in 2001; the income percentage is expected to drop to 29.4%.

Source: Chapman University

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