Leading economists at two major California banks are predicting that Orange County will do as well this year overall as it did in 1985.
Duane A. Paul of Bank of America said Tuesday that the county has "one of the most dynamic, diversified economies in the nation." He said the county's population growth, entrepreneurial spirit and diversity "has helped to make the area more resilient to downturns."
Kathleen M. Cooper of Security Pacific National Bank told owners and executives of small to mid-size businesses last week in Newport Beach that defense manufacturing, business services and tourism will continue to lead the county's economy.
In spite of expected cuts in military spending under the recent federal balanced-budget law, she said, "defense spending will still help to push income and jobs up." She said it would take some time before such new laws affect the economy.
The per-capita income of Orange County residents was $17,400, more than 25% higher than the national average of $13,700, Cooper said.
The number of people employed last year increased 5% over the previous year, she said, and new employment should reach that level or higher this year. She pointed out that the 5% increase was 1 1/2 times the national average.
Paul estimated that non-agricultural employment, which represents about 99% of the county's jobs, increased by about 4.8% last year and would gain by 3.4% this year. But he said that while his figures are more conservative than those of other economists, he agrees with them that the economy will remain essentially as strong as it was last year.
Both Paul and Cooper see a glut of office space curtailing future office construction because the new space cannot be absorbed by companies as fast as builders are putting up the structures. But they said businesses eventually will fill the new space.
James P. McDermott, regional senior vice president for B of A, said the main problems facing the county's economy are affordable housing and adequate freeways. The lack of affordable housing in Orange County "is impacting the county's ability to increase the labor force," McDermott said. And if companies cannot get workers to come to their plants, the firms may start leaving the county, they warned.
Cooper said she believes non-defense manufacturing, such as the long-slumping computer industry, will be a major problem area this year.