Orange County, which is reliant on tourism, had a higher percentage of job losses than the state as a whole during the COVID-19-induced recession, but construction is fueling a comeback, Chapman University economics experts said Wednesday.
The university’s annual economic forecast showed the county had an 8.9% job loss last year compared to the state’s 7.4% loss.
The forecasters predict an average jobs increase of 2.8% for this year, about the same pace as the state.
“We are now forecasting 8% increases on an annual basis by the end of the year,” Chapman President Emeritus James L. Doti said. “Orange County will be largely recovered, but about 30,000 jobs short of pre-recession levels.”
The county’s construction rate is “over pre-recession levels,” Doti said.
“We are now in a housing bubble,” Doti said.
Mortgage rates are predicted to rise to almost 5% by 2023 if inflation continues at the projected pace, the forecasters said.
“With housing affordability already decreasing rapidly as the median home price in OC barrels over $1 million, we anticipate downward pressure on housing appreciation over the next two years.”
Single-family and apartment residential permits are predicted to increase from 5,900 last year to 10,200 this year, an increase of 73%.
Selling a home in Orange County takes an average of 22 days, a historic low, according to the forecasters.
“By year-end 2021, our forecast calls for construction jobs to be at 112,000,” according to the university’s report. “This recovery has been fueled by historically low mortgage rates and a tight supply of unsold housing.”
Doti said California lost about 320,000 more jobs than other states.
“We’ve been much more aggressive in (COVID-19) mandates to restrict economic activity,” Doti said.
The state, however, also had a lower death rate than other states with less restrictions, Doti said.
“Greater stringency, lower death rate,” Doti said.
Nationally, the forecasters pegged GDP growth of 6.7% this year compared to a 3.5% decline last year when the pandemic began and restrictions curtailed economic activity.
“We haven’t had that since the early 1980s,” Doti said of the projected growth.
A “V-shaped recovery” was powered by about $5 trillion in federal COVID-19 relief, Doti said.
“During the Great Recession it was chump change” in comparison of federal relief, Doti said. “It was almost about $1 trillion.”
The forecasters predict higher inflation by 2023 and higher interest rates.
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