A UCLA economist did an analysis of the current “structural transition” in Orange County’s economy and concluded that “it will be around 2012 or 2013 before Orange County has fully regained the employment it lost in the home mortgage implosion.”
In the latest UCLA Anderson Forecast for California, economist Jerry Nickelsburg writes that the state’s economy is expected to produce weak — but positive — employment growth this year. Orange County, however, is “a different story”:
“It was the center of what was a boom and is now a shrinking industry: home mortgage finance. The industry was structured to handle the high volume of transactions experienced in 2004-2006 and must now adjust to the new and more sustainable level of activity.”
In the 12 months through April, Orange County employers shed 19,700 payroll jobs, with 16,800 of those job losses coming in the financial sector, according to the state’s Employment Development Department. Many of those jobs, particularly in the subprime sector, won’t be coming back. However, growth in other sectors should eventually allow Orange County’s job market to surpass its previous size. The question is, how long will it take?
Nickelsburg used statistical methods to compare Orange County’s current situation to 11 previous regional economic meltdowns, such as the downsizing of California’s areospace industry between 1990 and 1995; the dot-com collapse in Northern California beginning in 2001; Pennsylvania’s steel job losses between 1974 and 1986; and West Virginia’s coal industry contraction between 1979 and 2004.
Fortunately for Orange County, the mortgage industry, while a significant portion of the local economy, wasn’t the dominant force that other industries were in the previous examples. That means recovery won’t take as long as it did in some of those other regions.
Still, “if the other sectors in Orange County don’t start growing faster, and we see no reason why they should in an otherwise sluggish 2008/2009 economy, then it will take longer for the regional economy to recover from this important, but now much smaller industry,” Nickelsburg writes. “This means it will be around 2012 or 2013 before Orange County has fully regained the employment it lost in the home mortgage implosion.”
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