The coronavirus hit Orange County especially hard, but Chapman University economists said Tuesday in their annual report the county and state are poised for a speedy recovery.
“The hit to Orange County was a little greater” in terms of jobs loss, said Jim Doti, Chapman president emeritus and economics professor.
Comparing April 2020 with April 2019, the county saw a 15.4% drop in jobs.
“This is the first month we could see the full impact of COVID-19 on the economy,” Doti said.
Los Angeles County saw a 14.5% drop, the Inland Empire a 9.97% decline and San Diego County a 12.32% loss, Doti said.
Orange County sustained deeper cuts because most of the job losses were in the hospitality and leisure sectors, Doti said.
“During the Great Recession leisure and hospitality were only marginally affected,” Doti said.
Construction employment was affected as much in Orange County this time compared with the Great Recession, Doti said.
During the Great Recession, construction employment saw losses of 30% for seven quarters, but it is already recovering in Orange County during the pandemic, he added.
“Covid was largely a leisure and hospitality-led recession, whereas the Great Recession was a construction job loss recession,” Doti said. “That’s very important when you look at the salaries in both of those sectors.”
The leisure and hospitality industry jobs pay substantially less than construction jobs, Doti said. That will help cushion this downturn, he said.
Part of what’s fueling the recovery in construction is a rise in affordable housing in the county, Doti said.
From January through April it took fewer days to sell a home in Orange County than in 2019 during that same period, so it was a seller’s market, Doti said. But when the pandemic began it lengthened the time to sell a home, making it a buyer’s market, he added.
“But notice what’s happened over the past month,” Doti said. “We are back again in a seller’s market.”
Doti said the COVID-19 recession “will be short, but deep.”
“We’re forecasting a V-shape recovery,” he added. “The big hole will take us a while to dig out of, and there will be some jobs that never come back.”
Doti predicted that many of those retail jobs will be replaced by e-commerce jobs.
Doti predicted that 75% of the lost jobs will be recovered by year’s end.
Doti also sees inflation making a comeback by mid-2021.
“You may want to lock into low mortgage rates,” Doti said.
Doti added that “the stock market is going to be a bumpy ride” through the recession.
State officials should not have to raise taxes, Doti said.
The university’s annual report said a deeper downturn was expected with a shutdown of major attractions such as Disneyland
“What helps is that Orange County is a relatively diverse economy not heavily dependent on any one sector,” according to the report.
“That might be considered a weakness when considering how much the county trails the Silicon Valley in the share of highly paid workers in information technology. But the county’s diversity is a strength in softening the blows when particular sectors of the economy weaken.”
A 16.5% decline in the second quarter in construction jobs is expected to be a decline of 6.2% by year’s end, according to the report.
“This is in sharp contrast to the Great Recession when construction jobs steadily declined for almost three years for a cumulative loss of 35%,” according to the report.
The economists also forecast that former Vice President Joe Biden will defeat President Donald Trump by 10 percentage points in November.