California and U.S. Economic Growth Looks Brighter for 2015


Finance

As of Thursday, December 4, 2014

California has been slowly adding jobs to its payrolls, and next year should be no different.

The steady but slowly improving economy on the national and local fronts means there is still room for sustained growth. In 2015, the nation’s gross domestic product should see a 3 percent jump compared with a rise of 2.2 percent this year, according to the annual 2015 U.S. and California economic forecast, prepared by the A. Gary Anderson Center for Economic Research at Chapman University in Orange, Calif.

California is expected to gain 364,000 jobs next year, and Orange County employment should be up 2.6 percent with 38,000 new jobs being added. “Optimistic consumers have increased spending, and that, in turn, positively affected employment in the retail, wholesale, food and leisure sectors,” the report said. “This trend should continue into 2015.”

Home prices will be increasing but at a moderate rate, the report said. In Orange County, housing prices are expected to inch up 4 percent in 2015. That’s because more inventory of new and resale housing will keep residential real estate prices from rising too much.

The report noted that in 2014 a home buyer with an estimated median family income of $86,600 needed to spend about 35 percent of his or her gross income to pay for a mortgage and property taxes. This is a major improvement over the 47.3 percent of gross income needed to pay off a home in 2006. But it is still higher than the 27.2 percent needed in 2012, when housing prices were depressed from a higher inventory of repossessed and short-sale houses on the market.

On a positive note, industrial construction in California is expected to see an uptick because vacancy rates now are low.

One concern about any economic recovery is the fact that stagnant growth in other economies around the world means there is less demand for U.S.-made goods and services. Also, the strength of the U.S. dollar makes prices higher for overseas residents buying U.S. goods. Still, U.S. exports will see some growth in 2015.