Cal State Fullerton economists Anil Puri and Mira Farka have made revisions to the 2008 economic forecast, predicting job losses locally in Orange County and throughout the nation.
About 300 guests from the Orange County business community attended the biannual economic forecast conference held at the Irvine Hyatt, where Puri and Farka discussed current and future economic issues at a local and national level.
Some of the important topics addressed included the declining labor market, the mortgage industry and inflation.
In contrast to their mid-annual prediction in October, Orange County is expecting 15,000 job losses, a drop of about 1 percent. The forecast originally speculated a job growth of 1.1 percent, but the data publicized by the California’s Employment Development Department was incorrect, said Puri, the dean of the College of Business and Economics.
“We rely on the data provided by the state department [EDD],” Puri said. “When they revised, we had to redo our calculations.”
The weakness in the job market is being driven by deterioration of the housing sector, Puri said.
“Many home owners are not able to make payments and are defaulting and causing a crisis for the lenders . now it is spilling over into the ‘real economy,’ ” Puri said.
Home values are declining, consumers are spending less money because of less income and overall, it is affecting the economy, he added.
CSUF senior Rosa Gutierrez, an accounting major, has already been impacted by the mortgage industry.
Selling her Fontana house was no easy task. It had been in the market for over a year and sold for less than her asking price, she said.
On a national level, construction and financial sector jobs that involve mortgage or credit lending services are being lost. Locally, Southern California counties such as Riverside and San Bernardino are being affected by the housing market, while Orange County is more insulated from the shock, Farka, an economics professor, said.
Both economists predict further job losses nationally, while Orange County is expected to rebound by this fall. House prices will continue to dwindle in the upcoming year, Puri said.
Another factor affecting the current crisis is inflation.
Consumers are currently impacted by higher oil and food prices, Farka said.
As of Friday, a price of $126 for a oil barrel was recorded, according to CNNMoney.com, in comparison to $61 for a barrel of oil in May 2007. In Orange County, the average cost of regular fuel per gallon is $3.864, the American Automoblie Association’s daily fuel gauge report Web site reported Sunday.
Although the nation is said to be in a recessionary phase, Puri confidently stated that it is not in a recession. A recession occurs when there is a decline in two consecutive quarters in GDP, gross domestic product, he said.
“It is certainly a difficult time to start looking for a job, but nevertheless, it is also the best time for opportunities,” Farka said. “The best time will be during this fall. A time where businesses will be looking for new ideas, new financial instruments — a good time to get into the market.”
In the meantime, the nation should expect a slowdown, she said.
“If we set realistic expectations, we’ll be fine, no reason to panic,” Farka said.
The bi-annual forecast conference was held on April 29.