Orange County Economy

Orange County's strong economy will weaken a bit in 2000 as the construction market cools, consumer debt hits historic levels and higher interest rates slow the national economy, Chapman University economists said Thursday. The expanding housing market, in particular, will taper off, but perhaps not enough for most residents, according to the university's closely watched annual economic forecast.

Orange County is slowly but surely splitting into two halves: the older, urban, more minority northern half and the wealthier, whiter southern half, each with different views of which are the important issues as the 21st century approaches. Those differences became especially apparent in the 18th edition of UC Irvine's Orange County Annual Survey, a snapshot of how the county's 2.7 million residents feel about the issues.

Orange County's robust economy will cool off next year as the area feels the ripple effect from federal efforts to keep inflation in check by hiking interest rates, Cal State Fullerton economists predicted Thursday. "The good news is that there's no recession on the horizon," said economist Anil Puri, who presented the school's annual forecast. "We see nothing but a healthy, growing economy over the long run in Southern California, especially in Orange County."

Rebounding from a sluggish second quarter, manufacturing in Orange County has roared back and eclipsed the national average, with production, new orders and inventories of purchased materials all increasing, according to a Chapman University survey. But in a potentially ominous development, commodity prices jumped for the second consecutive quarter, indicating that inflationary pressures might be building. That could translate into higher consumer prices in the future.

Rebounding from a sluggish second quarter, manufacturing in Orange County has roared back and eclipsed the national average, with production, new orders and inventories of purchased materials all increasing, according to a Chapman University report. But in a potentially ominous development, commodity prices jumped for the second consecutive quarter, indicating that inflationary pressures might be building. That could bring higher consumer prices in the future.

With Orange County's economy humming along, residents are more optimistic than ever that the good times will continue, according to a survey released Monday. The Consumer Confidence Index in Orange County, which measures residents' attitudes about the national economy and their own financial situation, surged to the highest level since UC Irvine began tracking consumer attitudes in 1986.

For many home builders, these are the best of times. Buyers are plentiful and new-home prices rank among the nation's highest. But at some point the region's bubble probably will burst, raising the question of whether home builders should be preparing for the next downturn. Builders tend to take a near-term outlook of the economy, rather than a longer view. Some, for instance, have bought several years' worth of lots at current prices, which have soared in value.

Orange County's top executives are less optimistic about the local economy than they have been in recent years, according to a new UC Irvine study. About 63% of the executives surveyed said they expect their businesses to add workers, buy new equipment or expand their plants over the next five years, the UC Irvine annual executive survey found. That is the lowest percentage since 1992. Last year, 83% of respondents said they intended to expand their companies.

Bucking a national trend, manufacturing in Orange County stalled in the second quarter but should improve in the second half of the year, according to a Chapman University report. The university's quarterly manufacturing index, which tracks industry's expansion and shrinkage, declined by 13.4% in the three months ended June 30, after growing at a 36.7% rate in the first quarter, the largest gain in more than five years.

Bucking a national trend, manufacturing in Orange County stalled in the second quarter, but should improve in the second half of the year, according to a Chapman University report. The university's Orange County manufacturing index, which tracks industry's expansion and shrinkage, fell to 50.7 in the three months ended June 30, from 58.6 in the first quarter. An index reading in excess of 50 indicates the manufacturing segment is growing, while a reading lower than 50 reflects a contraction.