Chapman University President Emeritus Jim Doti on June 22 gave an update on his 45th Economic Forecast, punctuating data with humor.
Doti stuck with his December 2022 prediction of a recession in 2023, showing that the factors that feed into the gross domestic product – including job growth, money supply and housing starts – are down.
“We’re pointing to a negative change in the third quarter and the fourth quarter, and that’s the stuff of a recession, perhaps a moderate one … certainly a slowdown of some sort,” Doti said during his presentation at Chapman’s Musco Center for the Arts.
Doti said his forecast of a 1.5% change in real GDP was closer to the 2023 first-quarter change – 1.1 – than the consensus prediction of 50 other forecasts.
“So far our December forecast is looking pretty good – of course, what’s going to happen the rest of the year?” he said.
In December, Doti forecasted a drop in Orange County’s median home price to $933,000 by the middle of 2023. It was $983,000 in the first quarter of 2023, with Doti forecasting a drop of about 10% by the end of the year.
“Obviously that’s related to the home mortgage rate, but on the positive side we see mortgage rates dropping,” said Doti, predicting a slight decrease throughout the rest of 2023.
Housing affordability in the county has dropped, and Doti predicted a small uptick by the end of the year.
“It may suggest that we’re near a trough in terms of housing price depreciation and the housing market in general,” he said.
When talking about interest rates, Doti injected some humor.
“We at Chapman like to look at the height of the Federal Reserve board chairs,” he said, showing a graphic correlating how tall the last five Fed chairs have been to federal funds rates.
Regarding California, Doti and Raymond Sfeir, director of the A. Gary Anderson Center for Economic Research, delved into trends like inflow and outflow of people and wage earners – particularly people making over $200,000.
“We’ve been down on California and all of the problems … but we have to come up with some balance, and there are some strengths in California and Raymond, and I have been talking about them, because there’s a lot going, obviously, for this beautiful Golden State,” Doti said.
Additionally, Professor Fadel Lawandy, CAIA, gave his take on the stock national market.
Since what started as Doti’s Orange County economic forecast in 1977, Chapman’s annual forecast has become a nationally respected indicator known for its accuracy. Among the forecasts of 25 other agencies, Chapman’s forecast has been No. 1 in accurately predicting real gross domestic product (GDP) from 2004 to 2021, according to data Doti compiles.
Doti, Sfeir and Lawandy will give Chapman’s 46th Economic Forecast on Dec. 14, 2023.
Watch the Economic Forecast Update here.