Dawn Bonker
Just as it drove the bubble that led to the crisis, housing will slow the U.S. recovery, according to the midyear economic update released today by the A. Gary Anderson Center for Economic Research at Chapman University.
“(Housing is) going to be a problem for a while still,” said Esmael Adibi, Ph.D., director of the center and one of the chief experts who prepared the report, presented to a sold-out crowd of 750 business people
,
local leaders and policy-makers at the Hilton Orange County/Costa Mesa this morning.
But because of renewed consumer confidence, government supports, extended unemployment benefits, a trickle of new jobs expected next year and a strengthening of median home prices, Chapman economists predict a steady, albeit soft, recovery.
“We see a weak recovery. Not dramatic growth, but no double-dip” descent either, said Chapman President Jim Doti, the Donald Bren Distinguished Chair of Business and Economics.
But sluggish housing starts prevent a rapid or robust recovery.
“The major reason for the relatively weak recovery is the lethargic turnaround in residential construction,” the Anderson Center report stated. Continued drops in construction are expected to reduce the gross domestic product by 2.5 percent, according to the report.
Joblessness will continue to rise this year as well, with Orange County losing an estimated 18,000 more jobs, according to the report. But an employment shift is expected in 2011 with an expected 1.5% job growth, or 21,000 new workers.
The unemployment rate will drop slowly, or “sticky
–
downward,’’ Adibi said, suggesting that politicians and voters should not fixate on the numbers. The numbers will fall “very, very slowly,” he said.
The national debt, the financial crisis in Europe and skittish foreign investors still continue to weigh heavily on the U.S. economy, the economists said. But even slow recoveries spark positive momentum, President Doti said.
“In the end, the forces of recovery are strong,” he said.
Read more of the forecast summary
here
.
Find more coverage of the event in
The Orange County Register
,
OCMETRO
and the
Orange County Business Journal
.
The annual update reviews the annual forecast delivered every December and provides a look into the remaining year. The breakfast event is also a major fundraiser for Chapman’s general scholarship fund.
The forecasts are generated by the Chapman Economic Model, created in 1978 by Dr. Doti and his students. It was the first quarterly econometric model for a metropolitan area. The model is still used to create the annual forecasts and updates.
While the economy was the primary topic at hand, the event included a celebratory moment when President Doti waved the famous traveling Chapman pennant, which had just been returned by mountaineers John and Ryan Dahlem, who toted the pennant to the top of Mount Everest last month. President Doti and his son Adam will carry it to the top of Mount McKinley in Alaska in an expedition beginning next week.
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