The A. Gary Anderson Center for Economic Research at Chapman University released today the results of its 37th annual economic forecast for the U.S., California and Orange County. The forecast was presented to about 1,500 Orange County business leaders at a conference held at the Segerstrom Center for the Arts in Costa Mesa.
Following are highlights of the forecasts.
2015 U.S. Forecast
- Now 64 months old, the current recovery is slightly longer than the average duration of past recoveries, but its accumulated growth of 12.5 percent pales in comparison to recoveries that led to total growth of 40 percent before encountering recessionary forces. This suggests that the current recovery has legs.
- While unemployment at around six percent is down from recessionary levels, it’s still relatively high. In addition, the labor force participation rate is declining and at a current level of 62.8 percent is way off its pre-recession high of 66.1 percent. So it appears labor markets have enough slack to fuel continued growth.
- The greatest concern about the durability of the recovery is a widely anticipated sharp drop in global demand for U.S.-produced goods and services. A recent surge in the trade- weighted value of the U.S. dollar will tend to reduce demand for U.S. goods and services. But when the model accounts for all the relevant global factors, forecasters see U.S. export growth increasing in 2015, albeit at a slightly slower rate than is currently estimated for this year.
2015 California and Orange County Forecasts
- Current monthly employment statistics issued by the Employment Development Department (EDD) suggest that the pace of job growth has slowed significantly in California and Orange County. Chapman forecasters believe the current monthly job growth both in California and Orange County is underestimated. The EDD’s sampling methodology does not fully capture job creation by newly established small firms and hiring by existing small firms that add only one or two workers.
- Steady job creation, lower unemployment rates along with higher equity and home values have brightened consumer sentiment in California. The survey of California consumer sentiment hit its highest reading since the beginning of the recession in the fourth quarter of 2007.
- Optimistic consumers have increased spending and that in turn positively affected employment in the retail, wholesale, food and leisure sectors. This trend should continue into 2015.
California Healthcare Employment Outlook and the ACA
- In 2013, about 20 percent of the population, or 7 million people in California, were without health insurance. Current data suggest that about 3.4 million people signed up for insurance during 2014. This includes 1.2 million people who obtained insurance under the individual mandates provision of ACA and about 2.2 million people who are enrolled in the Medi-Cal program.
- With gradual increases in the number of insured, the forecast calls for an average annual increase of 3.6 percent in the number of jobs in the healthcare services and social assistance sector over the 2013-2020 period. That translates to an increase of about 498,000 jobs over this period.
- Similarly, albeit at a slower rate, forecasters see an average annual growth rate of 2.1 percent in pharmaceutical & medical devices manufacturing jobs in California over the next six years.