The Orange County economy is leading the way with impressive growth trends across the board!
While our national economy continues to trend positively as we roll into 2019, the Orange County economy is leading the way with impressive growth trends across the board according to several prominent economist. The Orange County economy remains strong and poised to continue its momentum though 2019. Here is what the economists have to say:
According to the Chapman University forecast, California continues to generate more job growth than the rest of the country, 2.0% versus 1.6% for the United States. That trend will be slightly stronger in Orange County. Chapman predicts Orange County’s job growth will be 2.2% this year, a net increase of 35,000 jobs. Between job growth and a low unemployment rate, the Orange County office market looks healthy and prepared to continue thriving.
In the fourth quarter of 2018, 4.77 million square feet of total office space transactions (sale and lease) were recorded, up from just over 3.88 million in the third quarter. Occupiers continue to seek onsite amenities and attractive workspace so they can attract/retain talent. The healthy level of activity during the fourth quarter offers a reminder that the Orange County office market remains on solid footing.
Also confident moving into the New Year was Chris Schwarz of the UCI Paul Merage School of Business. In spite of concerns about the risk of a full-blown trade war with China, the forecast for the U.S. economy is one of growth, albeit slower growth. California remains one of the most prosperous states, with a strong market that is expected to continue to grow.
Defense spending is surging. After years of decline, defense purchases are forecast to increase 3.7 percent this year and 4.7 percent in 2019. In 2020, the surge will end with only a modest increase of 0.7 percent.
Housing remains the one disappointing sector of the economy. Far from producing the average 1.5 million units a year, housing starts are forecast to peak at around 1.35 million units in 2019 and then roll over as higher mortgage rates exact their toll. Housing starts remain below the underlying demographic demand, with starts in multifamily units accounting for about one-third of the overall activity.
Mike Arnold, Assoc. AIA with Dodge Analytics forecasts that while our national economy continues to trend positively as we roll into 2019, the Orange County economy is leading the way with impressive growth trends across the board. As we approach the second longest expansion, there continue to be no signs of an imminent downturn; however, many are speculating one solely based on the length of prior cycles. Orange County’s labor market has been extremely tight since mid-2016, with the unemployment rate currently standing at 2.8% — creating challenges for many firms trying to expand.
Economic growth at the state and national level are expected to weaken in 2020, according to UCLA Anderson Forecast Director Jerry Nickelsburg. But California‘s growth is expected to continue to outpace the U.S. In the near term, California’s payrolls are expected to grow by 1.7 percent in 2018 and 1.8 percent in 2019, and then scale back to 0.8 percent in 2020. Real personal income growth is anticipated to follow a similar trajectory, growing by 2.5 percent in 2018, 3.6 percent in 2019 and 2.9 percent in 2020. The forecast also anticipates acceleration in home building to about 140,000 units per year by the end of the 2020.
The cooling trend in the Southern California economy will continue for the next two years if economists at Cal State Fullerton are correct. The university’s latest forecast for the region comprising Los Angeles, Orange, Riverside, San Bernardino, Imperial and Ventura counties expects 2019 to bring milder growth — though CSUF economists don’t see a serious chance of a recession through 2020.
“The economic recovery has matured, but that doesn’t mean we’ll fall off a cliff tomorrow,” says Anil Puri, director of CSUF’s Woods Center for Economic Analysis and Forecasting. “We still have room to run.” In spite of concerns about the risk of a full-blown trade war with China, the forecast for the U.S. economy is one of growth, albeit slower growth. California remains one of the most prosperous states, with a strong market that is expected to continue to grow.
The forecast projects a weakening of California’s economic growth in 2020 consistent with the slowing of the national economy, according to Jerry Nickelsburg, director of the UCLA Anderson Forecast. Nevertheless, California’s economy is expected to continue to grow faster than the U.S. economy.
According to William Yu, a UCLA Anderson Forecast economist, during the next year, tech jobs are forecast to grow during the next year by 2 percent in Los Angeles: by 2.2 percent in San Francisco; by 2.5 percent in Silicon Valley; by 1 percent in Orange County; by 2.5 percent in San Diego; and by 2 percent in the East Bay. Startup investments in Los Angeles have been accelerating in recent years: For the first nine months of 2018, the region saw $9 billion in investments, compared with $2.75 billion for all of 2011.
The former UCLA professor of economics and founder of Beacon Economics Christopher Thornberg said. “Things are wonderful. You’re going to have a great 2019.”.Thornberg defined the reasons for continued economic growth below:
- Consumer spending, consumer confidence and savings rates are strong.
- Auto production is ticking along at a nice, steady pace. General Motors’ recent decision to cut jobs was a rational response to conditions, not an indicator of the health of the overall economy.
- Inflation is constrained, wages are rising and unemployment is low. “There are more job openings in the U.S. economy today than there are people actively looking for work,” he said.
- Trade issues with Europe, Mexico and Canada are being resolved.
Overall it appears that according to most of the experts there will NOT be a recession in the near future but rather a slow down to more realistic levels. Life is Good in California !