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Access the CU Quarterly Performance Report Statewide trend Analysis for YOUR credit union

Your Economy—Your Credit Union: 2018 Forecast: 2018 – 2019 Forecast: Orange County
1.56 million

The number of non-farm jobs in Orange County as of late 2017—a record high


WEBINAR ALERT

WEBINAR ALERT
‘Tax Reform's Impact on Member Behavior'
Feb. 22nd; 1:30 – 3 p.m. Pacific
(Featuring Dr. Robert Eyler—board chairman of Redwood CU and economics professor at Sonoma State University)



MARK YOUR CALENDARS

MARK YOUR CALENDARS
The Leagues' 3rd annual ‘Your Economy—Your Credit Union' forum is coming in June!

(Questions? Email Matt Wrye)


 

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Orange County Report:
Read about local credit unions’ $1.38 billion economic impact in Orange County

(Email Matt Wrye for your local county report.)





Orange County: 3Q Industry Snapshot*

20 credit unions headquartered in the region.

Membership hits record 1.38 million individuals.

Deposits hit record $19.4 billion.

Loans reach $13 billion (first mortgages, second mortgages, HELOCs, business loans, new/used autos, credit cards, and other consumer loans).

First mortgages hit record $6.1 billion.

HELOCs/second mortgages reach $1.04 billion.

New auto loans hit record $1.9 billion, and used auto loans hit record $2.2 billion.

Business loans (includes landlord real estate loans) stood at $1 billion.

Credit card lending hits record $850 million.

Estimated $570 million spent annually on employees and operations.

3,261 individuals employed.

* Loan percentage increases are year-over-year and reflect dollar amounts.  Other dollar amounts represent “outstanding” snapshot data.  All data is publicly-filed balance sheet information extracted from the National Credit Union Administration as of Sept. 30, 2017 (third quarter).

** Contact Matt Wrye if you would like to receive a regional snapshot not included on the list above.

Orange County’s economy will keep expanding from 2018 – 2019 as it adds new residents and jobs. But labor force shortages, rising interest rates, the federal government’s budget deficit and other issues are constraining local residents as the broader economy continues forward.

That’s according to the keynote speaker of the “2018 Economic Forecast” recently hosted by the Chamber Business Alliance, a consortium of local chambers of commerce (Brea, La Habra, Placentia and Yorba Linda). The main presentation on Orange County and California was made by Beacon Economics and spotlights some intriguing viewpoints, trends and projections so your credit union can plan appropriately:

Orange County Economic Forecast

  • Orange County’s economy will continue growing in tow with the United States over the next 12 – 24 months. National Gross Domestic Product (GDP) will come in at a solid 3 percent for 2018, and the chances of a national recession are low in 2018 and 2019.
  • There are just as many “cons” as there are “pros” when it comes to what is likely to transpire in 2018. The “pros” for 2018 are: state revenues will be healthy; labor markets will remain tight; worker wages will continue rising; and exports/business investment will pick up their pace. The “cons” are: tighter labor markets will continue constraining economic growth; rising wages will put pressure on corporate profits; housing shortages will constrain local economic growth; interest rates will rise; financial markets are “frothy”; the consumer savings rate is starting to enter dangerous territory; the federal government’s annual budget deficit will widen sharply (adding to total U.S. debt); and political uncertainty in Washington, D.C. will dominate the news headlines.
  • There’s a “great disconnect” in what consumers, workers and business leaders across Orange County and California are worried about versus what they should be worried about. Most residents are worried about the nation’s number of jobs, who pays for health care, tax levels, income inequality, “funded” government liabilities, business investment, inflation, and the cost of housing. However, what they should be worried about are the number of workers, what we are actually paying for within health care, our tax structure, wealth inequality, “unfunded” government liabilities, a lack of public investment, a slowdown in business and consumer lending, and the supply of housing.
  • Total nonfarm employment in Orange County hit a record 1.56 million in late 2017 as some job categories outperformed others in growth—but recently this employment expansion is slowing down. The top three industries expanding their employment base the most during the year-over-year period ending November 2017 were leisure/hospitality, construction, and education/health services (others grew at a lesser rate). Industries losing jobs were manufacturing, local/state government, and financial activities. Compare this to California and you’ll find that the entire state only slightly lost some manufacturing jobs while gaining jobs in all other categories. Also, job growth in Orange County and almost all other regions across the state is slowing down, especially in San Francisco, San Jose, and the East Bay/Oakland region.
  • Newport Beach, Mission Viejo and Irvine remain the top three cities in Orange County having the highest percentage of high-earner households ($150,000 per year or more). Next in line are Lake Forest, Huntington Beach, Orange, Fullerton, Costa Mesa, Buena Park, Anaheim, Westminster, Garden Grove and Santa Ana. While this fact hasn’t changed since 2009, the aggregate number in each of these particular cities has only risen over the past eight years. For all of Orange County, 21 percent falls into this high-earner category.
  • Orange County has one of the highest populations of middle-income households who are renters and live in “older” residential structures compared to other U.S. metropolitan regions. About 36 percent of Orange County households with income between $35,000 - $75,000 are renting units built before 1970 compared to 33 percent in San Diego and Dallas, 32 percent in Los Angeles and East Bay/Oakland area, 31 percent in Houston, 31 percent in the Inland Empire, 28 percent in Phoenix, and 22 percent in San Francisco.
  • The median one-bedroom apartment rent in Orange County hit $1,375 in late 2017. This is up from $1,100 in 2014 (after falling from a peak of $2,050 in 2009). Some of the largest year-over-year rent increases as of late 2017 were in Anaheim, Santa Ana, Irvine and Brea. Putting rents aside, the local apartment vacancy rate has only risen between 2010 and 2017 from 4 percent to almost 6 percent.
  • Housing stock in four local cities declined by nearly 1,800 units between 2011 – 2016, but it rose more than 18,500 in another nine cities. Notable cities shrinking in residential units were Orange, Costa Mesa, Westminster, and Santa Ana. On the other hand, the city experiencing the largest increase in housing units was Irvine (15,800 new units). Altogether, Orange County (with its 34 cities) experienced a net positive of 25,800 total units built from 2011 – 2016. To put into context, single-family residential permits issued in Orange County hit a peak of 38,000 in 2004 before plummeting to a low of 6,000 in 2011, and multi-family permits peaked at 15,000 before dropping to 4,000 during the same period.
  • Orange County’s median home price hit a record $750,000 in late 2017. This stands in contrast to Los Angeles County (which had barely crossed over its previous 2007 peak of $575,000) and California as a whole (which was still noticeably below its 2007 peak of $520,000). For comparison, median prices in specific cities across both Orange County and other counties were: San Francisco ($1.27 million); Santa Clara ($1.06 million); Yorba Linda ($882,000); Fullerton ($703,000); Orange ($682,000); San Diego ($578,000); San Luis Obispo ($575,000); Anaheim ($574,000); Monterey ($547,000); West Covina ($528,000); Chino ($476,000); Pomona ($390,000); Riverside ($362,000); and San Bernardino ($293,000).
  • Existing single-family home sales in Orange County have remained nearly the same from 2013 – 2017, averaging 5,500 per quarter. From 2008 – 2012 this measurement averaged 4,500. Also, total local housing inventory (months of supply to meet demand) was at a three-month supply, or 1,750 units, as of late 2017 and has remained at this level since 2013 (it steadily dropped from a 22-month supply in 2007 to where it is today). This shows just how much over-speculative building happened in Orange County before the Great Recession occurred, when many builders suddenly stopped building or went out of business. However, as of today there is now a local housing shortage and not enough builders building homes, many experts argue.
  • From 2006 – 2016, Orange and Los Angeles counties experienced relatively the same population growth (170,000 and 190,000 respectively)—but only Orange County retained its share of single-family unit housing stock. Orange County was 65 percent single-family in 2006 and the same in 2016. However, Los Angeles County’s share of single-family housing stock dropped from 58 to 55 percent due to single-family building permits being cut in half (dropping by nearly 5,400). In general, both counties saw a significant increase in multi-family building permits issued during this above-mentioned period. Additionally, by late 2017 Orange County’s residential permits index measurement had fallen from its peak in 2016 to a level not seen since 2013 due to a significant decrease in multi-family units.
  • Commercial construction remains a solid player in the local economy, but its growth has recently slowed down a bit. The value of commercial building permits in Orange County spiked in mid-2016 but has since fallen to a level not seen since 2013. In fact, third-quarter 2017 data (year to date) shows office space, industrial space, and “other” building permit activity declining the most. Other commercial builder-declining activities were retail, hotel, and alterations/additions.
  • Vacancy rates for retail space in Orange County are lower than office space. Retail space was about 5 percent vacant in late 2017 compared to 16 percent for offices in the county. However, in the sub-market of North Orange County the office vacancy rate has averaged a whopping 24 percent over the past six years while the median rent has increased almost every quarter during the same period. This reveals the county’s distinct commercial office sub-market culture. Meanwhile, industrial warehouse vacancy was 6 percent (and industrial rents have only risen annually from their lows in 2011). These industrial vacancy rates are significantly better than the Inland Empire but about on par with Los Angeles County.

‘Community Indicators’ Report

The OC Community Indicators Report is published every year and takes a deep dive into where Orange County stands today, where it’s headed, and pivotal issues significantly impacting the county’s wellbeing. The most recent report gives a detailed look at the following:

  • Orange County Profile (page 2)
  • Children’s Health and Wellbeing Pivot Point (page 4)
  • Opportunity Gap Pivot Point (page 10)
  • Housing Pivot Point (page 18)
  • Economy (page 26): Employment; high-tech diversity and growth; and innovation.
  • Housing (page 30): Home affordability; rental affordability; and housing security.
  • Income (page 36): Cost of living and household income; and family financial stability.
  • Education (page 40): Kindergarten and readiness; academic performance; high school dropout rate; college readiness; high school STEM participation; and STEM-related degrees.
  • Health (page 52): Health care access and utilization; overweight and obesity; chronic disease; mental health and substance abuse; and well-being of older adults.
  • Safety (page 64): Child abuse and neglect; crime rate; juvenile crime; and drinking and driving.
  • Infrastructure (page 68): Transportation and water use/supply.

Demographic Profile and Projections: Orange County*

  • Total population: 3.2 million (and will hit 3.35 million by 2025).

  • Working-age individuals (15 - 64 years old): 67 percent of total population in 2015 (and will fall to 64 percent by 2025).

  • Labor force (at least 16 years old who are working/looking for a job): 1.6 million out of 2.5 million adult population.

  • Labor force participation rate (adults who “want” to work): 64 percent (or 1.6 million individuals).

  • Unemployment rate: 2.8 percent (versus 4 in CA and 4.1 in U.S.)

  • Unemployed workers: 45,700.

  • Median household income: $78,500 as of 2016 (compared to $66,600 for CA and $59,000 for U.S.)

  • Poverty rate: 12 percent (versus 14.3 in CA and 12.7 in U.S.)

  • Education of population: 38 percent have a college degree; 29 percent some college; 18 percent high school diploma; and 15 percent no high school diploma.

  • Employment sector growth: click here for a local future growth breakdown (2014 – 2024) of nonfarm job projections by industry, occupation, education, and fastest-versus-largest areas of importance in the Anaheim-Santa Ana-Irvine metropolitan region.
* Data as of January 2017 from the California Center for Jobs and the Economy; California Employment Development Department; California Department of Finance; Federal Reserve Bank of St. Louis; U.S. Bureau of Economic Analysis; and U.S. Census Bureau
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