O.C. Boom Still Has Legs, Forecast Says

Signs of a national economic chill are piling up. Auto sales are slipping, factories are ordering less, banks are tightening credit. But in Orange County, the good times should keep rolling next year, says Chapman University.

In a surprisingly bullish report released Thursday, economists at the Orange-based university predict Orange County employers will add about as many jobs next year--50,000--as in each of the previous two years.

Family incomes will grow strongly--to a median of $71,200 from $66,000. And retailers, while feeling a bit of a slowdown, are still looking at robust annual gains.

“Orange County keeps barreling along,” proclaims Chapman’s 2001 forecast.

“It’s very exciting for Orange County,” said Mark Moses, chief executive of Platinum Capital Group, an Irvine mortgage banking firm, after the economic conference at Chapman. “We’re going to continue to grow and grow for a number of years.”

Chapman’s forecast isn’t without some caveats. Certainly, growth has slowed in a variety of areas, and the stock market is a “wild card” that could stir up a mess.

Some people, such as bankruptcy attorney Marc Winthrop, have already seen some less-than-cheery signs. Business has picked up recently at his Newport Beach office, which handles corporate bankruptcy petitions.

“We’re seeing an increasing activity in Southern California generally, but in Orange County especially,” Winthrop said. “We’re seeing start-ups in the area who have basically expended their cash and they don’t have access to capital markets any longer.”

The bankruptcies involve a variety of businesses, including many technology-related companies, Winthrop said.

But all in all, Chapman’s annual forecast is very optimistic, even more so than Cal State Fullerton’s, which was released more than a month ago before a spate of sobering economic news. The latest came this week with Federal Reserve Chairman Alan Greenspan’s proclamation that the U.S. economy is indeed slowing.

Chapman does say there will be notable cooling in the county’s construction, as spending winds down on Walt Disney Co.’s new $1.4-billion California Adventure park in Anaheim.

But that’s about the only downdraft. The county will get a lift from military spending, and exports are headed higher. Even Orange County’s housing market will continue to sizzle in 2001, with average resale prices climbing nearly 8%.

“The year 2001 in Orange County will be pretty much a repeat of what we’ve seen in the past two years,” said Chapman President James L. Doti, who began dispensing the forecasts 23 years ago.

If the forecast holds up, 2001 will be the fifth consecutive year that the county has outpaced the nation in economic growth.

In another indication of the county’s economic might, Chapman says the Gross County Product--the total output of Orange County’s goods and services--is expected to rise almost 7% to $133 billion in 2001, surpassing Louisiana and just slightly less that Arizona.

Doti described the military sector as the county’s “hidden crown jewel,” a major engine of economic growth next year, regardless of who makes it to the White House. Increased spending in this area will benefit not only the big players, such as Boeing, but also plenty of smaller companies.

This was music to the ears of Jerry Friedman, chief executive of the Marvin Group, an Inglewood company that makes products such as weapons systems, launchers and bomb racks.

“We think the next five years will be very good for the defense industry, which is good for Southern California,” said Friedman, who expects to add 10% to his work force each year over the next five years.

Others who attended the conference at the university were also bullish about the local economy, but some said they expect at least a bit of a downturn.

“I think it is slowing down; we just hope that it’s not precipitous,” developer George Argyros said. “We’ve had the longest run in history, but it doesn’t last forever.”

Endural, a Costa Mesa company that makes plastic containers for the automobile and electronics industries, has seen some slowing in the electronics sector, director James Burra said. But that has been offset by an upturn in the automobile products business, partly from the introduction of new products, such as plastic cases to transport engines and transmissions.

“We think the new products will carry us for several years,” he said. As a result, the company is looking to hire a few more people, he added.

Most important in determining the health of the economy is the job growth rate, which according to available figures should rise to 3.5% from 3.3% this year.

But Chapman thinks the 3.3% figure for the county is actually higher--and could be revised to as much as 4%, almost twice the national job growth rate.

The area, with its beckoning climate, is a natural magnet for workers from outside the area. The labor force is highly diversified and highly educated.

“Skilled people are wishing to stay here, and businesses go where the people are,” said Esmael Adibi, head of Chapman’s Anderson Center for Economic Research.

In the future, availability of housing could become a significant concern for the county, Adibi warned.

The number of homes available for purchase is hovering at historic lows, even as demand grows. And the creation of jobs figures to keep driving up prices, according to the report.

The economic forecast is one of several regional projections released recently.

In addition to Cal State Fullerton’s optimistic projections in October, the Los Angeles County Economic Development Corp. predicted earlier this week that Southern California’s underlying strength in tourism, trade, biomedical and business-services industries would help keep it on a growth track.

Some economists say Northern California is more vulnerable to a national downturn because of its reliance on high-tech industries.