The A. Gary Anderson Center for Economic Research presented its Economic Forecast for 2018 at the Segerstrom Center for the Arts in Costa Mesa, CA. Dr. Jim Doti, president emeritus of Chapman University, presented information on the US, California, and Orange County. Chapman ranks #1 in forecast accuracy for real GDP in the ‘04-‘16 period compared to others participating in the Blue Chip Economic Indicators surveys AND we’ve continued our Lacrosse winning streak over USC!
U.S. Forecast: This is the second longest recovery on record and there are no recessionary indicators…relatively smooth sailing in 2018. Real GDP will decline from 2.3% in 2017 to 2.2% in 2018. National housing starts in 2018 are forecasted at 1.2 million units.
California Forecast: Manufacturing jobs are rapidly decreasing as they are sent offshore and to lower cost areas. Silicon Valley’s once booming information services jobs peaked at 10.3% in 2014 and dropped to est. 2.8% in 2017. Downward pressure on this variable, real imports in the US, and on total building permit valuation create a decline in CA job growth which is more in line with the US job growth trend. If you live in California and work in real estate the daily question is tax reform. Dr. Jim Doti presented key stats on the CA tax implications facing homeownership based on a study conducted by the Anderson Center for Economic Research and Hoag Center for Real Estate and Finance.
Orange County Forecast: OC housing appreciation increased from 3% in 2016 to 6.4% in 2017, but is forecasted to drop to 5.2% in 2018. Low inventory will continue to put pressure on prices. They also applied their CA tax reform methodology to show the impact on median home prices in OC cities resulting from the loss of tax benefits. See Chapman’s press release, “The Impact of the House Tax Plan on Orange County Home Prices,” dated November 17, 2017. Payroll employment annual % change moves from 0.6% in 2017e to 0.8% in 2018 showing continued weakness, but should cease with job growth picking up. OC’s 2017e of 0.6% is much lower compared to CA at 1.7% and US at 1.5%.
2018 Economic Forecast Press Release
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