Economists: OC Recovery Slow, But No Double-Dip
IRVINE (CBS) — The economy in Orange County may not be improving at breakneck speed, but it's on the road to what's likely to be a slow recovery, according to authors of a new economic forecast released on Wednesday.
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"The bottom line here is the recovery is slowly improving, it is sustainable, there's no double-dip (recession) in the winds and the momentum will pick up and 2011 will be a much better year than 2010," said Mark Schniepp, who co-authored the eighth annual UCLA Anderson Forecast with fellow economist Jerry Nickelsburg.
The recovery is being held back by high unemployment and low consumer confidence. Employers are still wary of hiring, leaving unemployment still hovering at about 10 percent, and consumers are jittery enough about the economy that they're still afraid to spend, the economists said.
About 24,000 new jobs are in the forecast for next year with 41,000 more in 2012, according to the economists. The county's unemployment rate should fall to 8.5 percent next year and 7.4 percent in 2012, according to the report.
The overheated rhetoric from politicians during a sharply contested election season isn't helping matters when it comes to confidence in the recovery, Schniepp and Nickelsburg said.
"There are very mixed signals from the policy makers and politicians in the political season," Nickelsburg said. "There are such polarized viewpoints being put out that it does create uncertainty about the direction of (economic) policy. It is making consumers and businesses cautious."
A full recovery may not come until the middle part of this decade, but it could come quicker if business and consumer confidence improve because there's pent-up demand for goods, housing and services, Nickelsburg said.
Schniepp said constant news reports about high unemployment and local government spending cuts tend to add to the pessimism.
"We're seeing actually pretty good job growth," Schniepp said, noting the private sector added 24,500 jobs since the beginning of the year.
In all categories from home sales, to retail to commercial business the economy is improving a bit, Schniepp said.
Schniepp insisted that while reports of a double-dip recession are bogus, the federal government's stimulus efforts didn't do the economy much good.
Schniepp advised against any more stimulus programs from the federal government.
"I'd just like the government to stay out of the economy," Schniepp said. "The economy is a self-healing, self-correcting process."
And if the Republicans take control of the House or Senate and it leads to political gridlock, that will probably help the economy because there won't be as much government meddling with it, Schniepp said.
"Gridlock is good for the economy," he said. "If that happens you'll see the stock market take off."
Orange County, as ground zero for the housing implosion a couple of years ago, is leading the way in improving, Schniepp said.
The economists report that the pace of residential permits is 55 percent higher this year compared with last year's low point. The pace of new home sales is 41 percent higher than last year as well, they said.
"Orange County, when you compare it to other counties, it's the leader in Southern California and leading most of the counties in the state, aside from maybe in the Bay Area," Schniepp said. "It's creating most of the jobs in hospitality, leisure, professional services and retail is starting to come back."
The holiday season should be one of the best in years for local merchants, Schniepp predicted.
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