CSUF’s Spring Economic Forecast Delivers Mixed News for the County – Orange County Register

Rarely, said Anil Puri, an economics professor at Cal State Fullerton, has there been such a confluence of significant events testing the fundamentals of how the country and the world works.

The summary of the past year was delivered during Puri’s keynote speech at the 2022 Spring Economic Forecast, which was held on April 22 at CSUF’s Meng Hall.

Puri, director of the Woods Center for Economic Analysis and Forecasting at CSUF, and his colleague and co-director Mira Farka shared their insights and economic prognoses in front of business leaders, fellow educators and students.

The two years of pandemic-induced upheaval appeared to be reversing in the fall.

The stock market rose, the unemployment rate dropped dramatically, and consumer confidence soared.

What has happened since?

Citing supply chain issues, soaring prices at the pump, inflation, stagflation, Russia’s invasion of Ukraine and a global pandemic, Puri said future generations will characterize the period as a “turning point”.

“A drastic shift in geopolitics because of the ongoing war, a realignment of financial intermediation…and a drastic mix of ideologies,” Puri said, “Not only in our country but around the world, what is product, combined with an explosive growth in technology and social media, all pushed at a breakneck pace by the pandemic.

Referring to the Russian invasion, “Ukrainians are paying the price with their blood,” Puri said, while the rest of the world has been hit economically.

Puri spent the first 40 minutes of the forecast delivering a daunting list of economic indicators, nearly all pointing in the wrong direction.

Oil prices have risen dramatically, almost 100% since the start of the invasion, with US households paying $2,400 more per year at the pump than in 2021.

Russia and Ukraine are sole suppliers of raw materials such as neon, nickel, palladium and seed oil, and the disruption of trade created by the war led to a 78% spike in raw material prices. %.

Europe is more heavily dependent on Russia for commodities than the United States and, therefore, will be affected more dramatically as the war worsens and more restrictions are imposed, Puri said.

The U.S. job market is strong, however, with 540,000 jobs added per month over the past 18 months, he said.

The stock market has been down since January, but up significantly from two years ago.

Manufacturing is strong but less robust than in 2021.

Supply and labor shortages are expected to continue alongside soaring inflation.

The Federal Reserve Bank is trying to rein in spending, caused in part by stimulus spending, and more rate hikes are likely, Puri said.

And the biggest area of ​​uncertainty surrounds the war, the economist said.

“It’s kind of an endless war and we don’t know where it’s going to take us and it can lead to unexpected directions,” Puri said. “It really is an unknown risk.”

Going forward, the journey is going to be “treacherous” and the road is going to be “twisty”, he said.

Nor did Farka’s crystal ball reveal a rosy future.

“I feel like there’s no easy way, no sugar coating,” Farka said. “Things are not going as we had hoped. All good things seem to be a bit behind us. Pandemic reopening is over. More tax support.

The fiscal stimulus gave the United States a false sense of security, which Farka likened to “selling our souls to the devil.”

The economy recovered quickly but also aged rapidly, she said.

Inflation is not just high, it is “sticky”, she said, meaning spike in inflation is combined with stagnant growth.

“The most worrying concern is where are we going to be in 12 to 15 months,” Farka said. “Things are going to get a little heavy.”

We expect the supply problems to get worse and worse, especially during the summer,” Farka said.

The range of ships delivering supplies and anchored in the ports of Los Angeles and Long Beach delivering supplies will continue to grow.

But there is a modicum of good news, she said.

There’s “piles of money” from the pandemic stimulus and money “laying around in the economy that should carry us for about 12 months,” Farka said.

Although the pockets of the economy are not completely back, they are improving, she said.

Segments of the hospitality industry are still in the red but should also move in a positive direction.

In Orange County, unemployment is 3.1%, down from a year ago.

The county continues to recover, with employment in education, transportation, and healthcare seeing increases of 5.4%, 3.6%, and 1%, respectively, since February 2020.

Manufacturing and leisure and hospitality have improved in the county, but are still down 5.9% and 6.1%, respectively, from pre-pandemic levels.

Double-digit price appreciation continued in the OC housing market, with the median price in the county hitting $1.167 million in February.

Expect a stabilization — but not a reversal — in high prices, Puri said.

Quoting the words of Scorpions’ “Wind of Change” – which exulted over the fall of the Soviet Union, pointing to a more unified world – the winds of change have grown more ominous lately, Farka said.

“Hopefully it won’t last long,” she said.