CSUF Economic Outlook

[graphrix_IHB]

<a href="http://business.fullerton.edu/centers/iees/reports/Econ_forecast_report.pdf">The pdf file</a>.





What I find amazing about this report is the poor timing of it. They tout the fact that typically the EDD/state employment data tends to under report the amount of jobs and that the revised Fed data usually comes it higher. The problem with this is the recently released Fed data showed that the professional and business services sector was negative in Q1 where as the EDD data showed a gain. This like many other local economists state that this sector is OC's saving grace. It is as if they do not realize that the RE sector needs the services of that sector especially when you factor in architectural services. Plus think of how many high tech jobs were created by mortgage brokers that needed high tech lead systems. Anecdotal as it may be I know someone in tech who had a lot of mortgage clients and he would be be called for every paper jam and now his phone doesn't ring nearly enough.





They also neglect the fact that construction and RE jobs are over-employed when compared to historical averages. Currently construction accounted for 7% of the non-farm jobs however for most of the decade it was around 5.5%. Financial activities averaged around 7.3% and currently this is at 9.1%. These are needs based jobs or in other words they are needed as job growth continues. They grow with them and the percentages should stay relatively flat.





The number of months of inventory is a great chart. The peak was near 27 months and currently from the report it is about 20 months. They state that the inventory will increase substantially which to me means it will shatter the record since this report does not include the current quarter. Add in all the REOs not on the market and this will be even worse.





The education, health care and leisure/hospitality jobs increased in the last bust too. So taking these sectors as a positive sign for growth is purely a false sign.





My predictions for job growth is flat with .5% being the best case scenario. And after I read the CBRE commercial RE report this sector will not save construction. The amount of vacancies and availability is continuing to increase.

 

[No_Such_Reality_IHB]

<p>I suspect that Figure 2, page 2, gives you all the information you need to figure out what's going to happen. Look at the income plummet and look at the consumer expenditures trend down.</p>

<p> </p>

 

[Rocker_IHB]

Thanks graphrix, next monday is the report from UCLA Anderson School of Management .

 

[southoctracker_IHB]

UCLA is saying job growth will be flat in 2008. I couldn't find an online version of this, but here is the Register story:





<strong>UCLA: Job growth flat


In its best-case scenario, the Anderson Forecast sees an increase of 0.1%, or 700 jobs, in Orange County in 2008.</strong>


Economists at the UCLA Anderson Forecast are predicting little, if any, job growth for Orange County in 2008.


Their annual economic forecast for the county, released Monday, calls for an increase of 0.1 percent, or 700 jobs, next year.


However, there’s a caveat: If job tallies for 2007 are revised downward by the state’s Employment Development Department, then UCLA’s forecast for 2008 will be cut “correspondingly,” economist Mark Schniepp wrote. In that scenario, he said, Orange County could lose 6,300 nonfarm jobs next year, a contraction of 0.4 percent.


By hedging its bets, UCLA is highlighting the uncertainty surrounding both EDD’s data and the county’s economic outlook.


For the 12 months through September, Orange County employers added 300 jobs, for growth of 0.02 percent, according to EDD’s monthly survey of employers.


Those figures will be revised in February as part of EDD’s annual process known as benchmarking. Schniepp expects the revised numbers to show negative or zero job growth this year.


“If the employment revisions for calendar 2007 show that the Orange County workforce actually contracted this year, 2008 will represent another year of contraction for the labor market,” Schniepp wrote.


The county’s unemployment rate should remain at about 4.2 percent next year and “most of the labor market misery will be confined to the residential real estate related sectors,” Schniepp wrote. “There will be some collateral damage as well, principally in business services that support finance and real estate.”


Other economists have been divided on their outlook for Orange County.


Cal State Fullerton’s 2008 forecast, which was released last week, predicted job growth of 0.9 percent for Orange County next year.


Economist Esmael Adibi at Chapman University has said he fears Orange County is headed for a recession, based on EDD’s data showing almost zero job growth for the county in the 12 months through September.


Adibi defines a recession as two consecutive quarters of negative year-over-year job growth. Chapman plans to release its 2008 Orange County economic forecast in December.


In UCLA’s outlook for residential real estate in Orange County, Schniepp is calling for an 18 percent increase in the volume of home sales in 2008. “This is not a significant bounce in view of the free fall that began in 2006 and continues today,” Schniepp wrote.


UCLA sees Orange County home prices falling by 4 percent to 7 percent in 2008. “Home values will decline but not collapse in 2008. The slowdown in home price appreciation, which was long overdue, will persist into 2009 and reverse by 2010,” Schniepp wrote. Cal State Fullerton economists last week predicted a 5 percent decline for home prices in Orange County next year. In September, home prices fell 9.5 percent from the same month a year earlier, while the number of sales was down 44 percent, according to Data-Quick.