News Summary

Economists from California State University project slower job growth and rising unemployment in Orange County. Although a significant recession is not predicted, inflation and sluggish growth trends present challenges for the region’s economy. The CSUF report anticipates the unemployment rate may rise to 4.7% this year, with job growth expected to remain minimal. Additionally, high housing costs continue to be a significant concern for residents, with home prices soaring in recent years. The economic outlook remains complex, influenced by various factors including tariffs and inflation.

Orange County

The Orange County economy is expected to face slower job growth and rising unemployment, according to economists from California State University, Fullerton (CSUF). In their Spring Economic Forecast released on April 30, economists Anil Puri and Mira Farka provided insights into the economic conditions influencing the region. While a significant U.S. recession is not predicted, the economic outlook remains complex due to inflation and sluggish growth trends.

Data from the U.S. Commerce Department coincides with the report, indicating that the U.S. economy contracted by 0.3% in the first quarter, the first decline since the same period in 2022. This downturn is largely attributed to businesses ramping up inventory ahead of prevailing tariffs and a notable slowdown in consumer spending.

Looking ahead, the CSUF report projects U.S. Gross Domestic Product (GDP) growth at 1.4% for the current year and 1.7% in 2024, following a growth rate of 2.8% noted in 2024. The forecast suggests a considerable weakening of the national economy could emerge in the latter half of 2025 continuing into 2026, with Southern California counties echoing similar patterns.

Unemployment and Job Growth Trends

Orange County’s average unemployment rate is projected to increase from 3.9% in the previous year to 4.7% this year and next, with the possibility of exceeding 5.3% in late 2025 and early 2026. Job growth in the area is anticipated to be minimal, with rates forecasted at just 0.5% in 2025 and 0.4% in 2026, down from 0.6% the previous year.

A recent survey of approximately 50 business leaders in Orange County depicted a stark drop in business sentiment, with the index rating sliding from 85.9 to 52.2, marking the lowest level since the pandemic’s peak in 2020-21. Concerns highlighted by local business leaders include inflation, geopolitical risk, and the impact of interest rates and government deficits.

Impact of Tariffs and Housing Costs

The CSUF economists predict that U.S. tariffs, currently averaging 16.2%, will persist at elevated levels throughout the current administration, limiting potential negotiation opportunities. As a consequence, it is anticipated that import levels will decline as businesses make decisions influenced by these tariffs.

Moreover, high housing costs in Orange County continue to pose challenges for residents. The median price of a single-family home surged from $861,000 in April 2020 to an estimated $1.47 million in February 2025. Although no recession is currently projected, the report indicates that housing prices are unlikely to see significant changes unless economic conditions shift dramatically.

Labor Force and Economic Background

Labor force growth in both Los Angeles and Orange Counties has stagnated, remaining below pre-pandemic levels. This stagnation is compounded by the fact that approximately 62% of new jobs created in California since the pandemic have been low-paying, significantly impacting affordability and homeownership in Orange County. The region had approximately 236,000 unauthorized immigrants as of 2019, contributing to complex labor market dynamics.

The report also criticized the Department of Government Efficiency (DOGE) for potentially undermining confidence rather than achieving budget cuts. Furthermore, it pointed out that high living costs, coupled with inadequate job creation in higher-wage sectors, are slowing California’s economic expansion.

In summary, while experts do not foresee a recession in the immediate future, challenges such as rising unemployment, inflationary pressures, and high housing costs are likely to continue affecting Orange County’s economic landscape.

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Additional Resources

• Orange County Business Journal
• Orange County Business Journal – Event
• OC Register
• Wikipedia: California
• Encyclopedia Britannica: California