Doom and Gloom? Not So Much

Doom and Gloom? Not So Much                                                                                                        By: ND

In news that doesn’t really surprise anyone in Orange County, closing the Disneyland Resort has been a major blow to the economy.  CSUF Economists Anil Puri and Mira Farka have predicted that with the Country already in a recession, an additional contraction of 4.3% will take place and that unemployment will reach 8.9% nationally, 7% here in OC (double the former projection).  But it’s not just Orange County.  Austin, Texas, for example, could lose more than 260k jobs in the coming months depending on the rebound.  That’s 1 in every 4 jobs…lost.

Back to OC and Disney

The numbers driving their projections were fascinating.  For example, Walt Disney Company creates about 57,000 jobs in Orange County and has a $3.7 billion dollar impact on the Orange County economy, resulting in approximately $258 million dollars in tax revenue for the County.

On the Rebound (like Dennis Rodman) 

Economists seem to disagree over the rebound.  Will it be quick and steep? Will it be long and drawn out? Or, will things get worse before they get better? CBRE projected that the recovery would be quick and that it could even resemble the Nike swoosh.  Wouldn’t that be great? Especially considering the recent launch of ESPN’s The Last Dance  .

Consumer Spending 

Based on all of the data obtained/presented, the economic devastation caused by Covid-19 will only get worse as the problem endures.  Prior to the pandemic, consumer spending across categories was generally in line with YOY averages, save for Airlines (-5.8%), other transportation (-4.4%) and travel agencies (-7%).  Makes sense, right? Less travel related spending as the news of the pandemic spread.  

A Bit About Housing 

The housing market was still relatively healthy.  In fact, Haus economist Ralph McLaughlin reported that the home ownership rate had increased to 65.3% nationwide.  With more people buying houses, and new rental housing stock being delivered to the marketplace, you expect to see rent growth slowing.  And in fact, workforce housing in Orange County, CA has maintained a 4% vacancy rate YOY and a growth rate of 3.5%.

The Last Dance, 2020 Edition

Bottom line, we are coming into election season.  The stakes are high.  The economy was on solid ground prior to the pandemic, but expect additional legislation and stimulus packages as the country goes back to work and expect, even if short-lived, a fourth quarter comeback rally that MJ himself would be proud of.  That is, of course, if we ever get back to work.