Promising economic outlook for the OC

Emerging industry clusters and major new developments promise vibrant future economic growth across Orange County, and could help the county and region moderate a recession, according to a new economic report.

The report, released Thursday by the Southern California Association of Governments (SCAG) as part of its 13thAnnual Southern California Economic Summit, shows Orange County continuing to lead the region in several metrics, including the highest median real household income ($107,335), highest educational attainment, lowest poverty rate (10 percent), lowest unemployment rate (2.7 percent) and highest per capita gross domestic product.

And while most Orange County industry sectors have seen job increases over the past year, it’s the emergence of industries, such as medical devices, information technology and advanced transportation, that provide even greater optimism for the future.

“Orange County is in a strong position when it comes to withstanding a potential global economic downturn. The strength of our local economy should help shield us from some of the global economic headwinds that we’re facing, such as inflation, high interest rates and a potential decrease in consumer and business spending,” said Wallace Walrod, Chief Economist for the Orange County Business Council.

Walrod is part of a new Economic Roundtable convened by the SCAG – which hosted the Summit in downtown Los Angeles – to provide both a snapshot of the region now as well as a preview of economic opportunities and challenges ahead. Their research was compiled in a report that offered caution on turbulence ahead from global forces, but also promise that Southern California is better positioned than other regions to withstand it.

Among the factors that could moderate the impacts of a possible recession across the six-county SCAG region:

• Continued growth in core industries such as information, logistics and tourism
• Measurable increases in labor productivity in 2022
• New development and construction in infrastructure and housing, both public and private
• Household debt and real estate values that are less likely to decline than elsewhere

“With improvements in the global inflation picture, combined with continuing 2022’s positive momentum, the region’s economy raises hopes that the much-anticipated global recession of 2023 will not severely impact Southern California,” said Dr. Gigi Moreno, Senior Economist at SCAG.

However, threats do remain. In Orange County, housing represents the biggest challenge. With a current median sales price of $1.2 million – the highest in the six counties – only 24% of first-time home buyers can afford an entry-level single-family home. Rent prices are also among the highest in the region.

“As OC’s high housing costs continue to price out younger residents and their families, the county is getting older, and has lost population in the last two years,” Walrod said.

Click here for the complete Southern California Economic Update.