Payrolls in Orange and Los Angeles counties will continue to expand this year and next, but at a more modest rate than before, while job creation in the Inland Empire soars.
That’s the prediction of Cal State Fullerton economists in their semi-annual forecast, released today.
“Orange County is close to full employment,” said Mira Farka, co-author of the survey with Anil Puri. “So any future gains will occur at a slower clip than in previous years.
“Inland Empire growth will be more robust because the economy there has a lot more slack. In L.A. we’ll see job growth, but at the same pace as before.”
The forecast predicts payroll jobs in Orange County will grow by 2.1 percent this year and 1.9 percent in 2018, down from 2.3 percent in 2016.
While the jobless rate remains low, at 3.7 percent, more people are expected to enter the labor force, boosting payrolls, Farka said.
Los Angeles County employment growth will dip slightly from 2.5 percent in 2016 to 2.3 percent in 2017 and 2.1 percent the following year, the economists foresee.
Riverside and San Bernardino counties will expand by 4.4 percent this year, up from 3.5 percent in 2016. In 2018, the forecast predicts a 4.8 percent growth.
“The Inland Empire lost a lot of jobs during the collapse — more than Orange County and Los Angeles,” Farka said, “So they have a lot to make up. The housing bust was much bigger there, which decimated the economy.”
Inland Empire employment growth has been driven by construction, which added jobs at a 7.9 percent rate last year, along with transportation and warehousing, at 7.3 percent.
Construction also was the fastest growing sector in Orange County last year, at 5.7 percent. Leisure and hospitality, which includes hotels and restaurants, grew by 3.9 percent as tourism continues to boom.
Professional and business services, which includes high-earning lawyers and managers as well as modestly paid temp workers, was also strong with a 3.3 percent gain.
Only one major Orange County sector declined last year: Manufacturing jobs fell by 0.4 percent, led by a 4.1 drop in employment at fabricated metal plants.
In Los Angeles County, payroll job growth last year was also led by construction, as well as by leisure and hospitality, while manufacturing lost jobs.
Significantly, the economists said, the county experienced a healthy increase in information technology jobs, up by 11.2 percent over the past two years, thanks to hiring in the motion picture and sound recording industries.
In Orange County, CSUF conducts a quarterly survey of 700 business leaders on their expectations for their companies’ growth and the health of the economy. This business index was “at its highest level ever in the first quarter of 2017,” the forecasters wrote, “indicating unrivaled optimism about local business conditions.
“The OCBX only declined slightly in the second quarter, so optimism continues,” they added.
Nonetheless, 75 percent of the business leaders in the survey cited “political and economic reforms” as their most pressing worry.
But exactly what concerns them in the panoply of policies under consideration in Congress and by President Donald Trump‘s administration was unclear, Farka acknowledged.
In the survey, which asked only general questions, 55.6 percent cited “insufficient reform” as the biggest threat to the U.S. economy, while 20.4 percent saw “rapid reform” as the largest concern.
Thirteen percent named a hike in the Federal Reserve interest rate as the biggest threat, while 7.4 percent cited the federal debt and 3.7 percent named China.
In the CSUF forecast for the U.S. economy, Farka said, “We are cautiously optimistic. But the main risk, both to the U.S. and the local economy is what happens in Congress and the administration.”
She added, “there is a huge possibility for upside and a huge possibility for downside if Congress doesn’t deliver on corporate tax reform, and businesses are disappointed.”
The forecast predicts a growth in real gross domestic product of 2.3 percent this year and 2.6 percent in 2018, up from 1.6 percent last year.
It foresees payroll employment growth of 1.5 percent rate this year, and 1.3 percent next year, up from 1.8 percent in 2016.