Spending will increase, experts say

The economy is showing signs that it is on the path to recovering from “the great recession” later this year and we should see job growth in the middle of 2010, Chapman University experts said Wednesday.

At their economic forecast update Wednesday morning, professional econometric analysts and would-be amateur stand-up comedians Jim Doti and Esmael Adibi gave an appraisal of the state of the national and local economies to an audience in Costa Mesa.

They said their newest numbers validate predictions they made in December that President Obama’s stimulus plan and other federal initiatives would lead to more consumer spending and encourage lending.

Consumer spending usually shoots up after a deep, long recession like the present one, Doti said, but it will increase gradually this time around because people are saving more money.

“The miracle of the free market is that it’s causing people to do what they should have done anyway,” he said.

Orange County housing prices should also start to rise again in mid-2010 propelled by a few factors, according to Adibi. Prices have dropped so much from their values at the height of the bubble in 2006 that they are once again affordable. Also, construction has slowed down so much that it has not been keeping up with natural increases in demand caused by population growth.

Adibi said that the job market was looking up, although it usually is one of the last areas of the economy to rebound.

“All these massive layoffs that we had — they’re all behind us,” Adibi said.

A decrease in jobs during the first part of 2010, the economists predict, will be partially offset by an increase during the second part of the year, yielding a small but almost flat loss of 2,000 Orange County jobs in 2010 — not bad considering the almost 50,000 jobs the county is expected to shed by the end of this year.

As far as Doti’s Law is concerned — an economic trend that the Chapman president noticed in which each time a Republican takes over the White House from a Democrat the stock market tanks and each time a Democrat takes over from a Republican it soars in the first year of the presidency — it looks like the rule might continue through the Obama administration.

The stock market continued its downward spiral through the first few months of the Obama presidency, but it has risen since and is now 13% higher than it was when he assumed office.