Business is returning, and many economic metrics are headed in the right direction as Orange County and the rest of the U.S. reopen from the coronavirus-induced lockdown that brought a sudden end to the longest expansion in American history.
On July 2, for instance, the Bureau of Labor Statistics reported that nationwide unemployment fell to 11.1%, a historically high figure, but a sharp decline from the 14.7% rate in April. Nearly 5 million jobs were added.
But the recovery is fragile and risks remain as the virus surges in many states not previously hard-hit by the virus, such as Texas, Florida, California and Arizona. And in California’s case, unemployment was already at higher levels than the national average, topping out at 16.4%.
Cal State Fullerton economist and Mihaylo College Woods Center Director Anil Puri; Lucy Dunn, CEO of the Orange County Business Council; Joe Hensley, president of US Bank in Orange County; and Mark Costa, senior VP and area manager for Kaiser Permanente, briefed Southern California business leaders, academics and members of the media on the state of the reopening in a June 30 webinar presented by Mihaylo College of Business and Economics at CSUF.
Orange County Executives Anticipate a Better Third Quarter and Beyond
Puri reported on the results of the recent Orange County Business Expectations (OCBX) survey, which provides a quarterly barometer of economic conditions in the county based on a poll of business leaders across many industries.
After an abysmal second quarter, in which the survey declined to 22.7% from 92.9% in the previous quarter, it has now improved to 62.9%, the most significant improvement since the end of the Great Recession. A reading above 50 indicates the expectation of future economic growth.
A total of 42.9% of CEOs, managers and business owners polled anticipated business activity to improve or stay the same in the third quarter of 2020; 47.1% anticipated significant or some growth in their own industry, and 32.9% expected declines. The rest of those polled anticipated stability.
Though hiring expectations are still historically poor, the 22.9% of firms expecting to increase their labor force is up from 3.8% in the last quarter, and only 18.6% are likely to cut jobs, down from 50% in the second quarter.
Queried on the most significant factors impacting their company, respondents were most likely to cite the overall economy (63.8%), followed by government regulations (17.4%).
And asked about when their business will return to pre-pandemic levels, 24.3% expect this by the end of 2020, though 20% expect a full recovery to wait until 2022 or later. The remaining anticipate full recovery sometime during 2021.
Coronavirus may be top of mind for business leaders today, but it is far from the only concern facing the Orange County economy.
When queried about the biggest threat to the economy other than the virus, 71.8% named the political and social conditions currently gripping the country, including political polarization and major protest movements.
“Given the upcoming elections and deep polarization, it is not surprising to have that listed as a major concern,” says Puri. “But added to that now is the social upheaval caused by Black Lives Matter protests that are on the mind of businesses. These factors are likely to have longer term impacts.”
The Health-care Sector Supports Orange County’s Recovery
Essential to keeping the recovery on track is controlling the coronavirus pandemic, and Costa lauds initial efforts by Orange County residents and businesses.
“As a county, we did an excellent job, both as citizens and as a health industry, between mid-March to about mid-June. During that period, Orange County had a lower incidence of infected individuals and hospitalizations, and that served us well,” said Costa. “That allowed our health systems to work with our county health department and emergency medical services staff to plan and prepare for potential surges, and allowed us to get our protective equipment and ventilators and capacity plans in place that across our county made us prepared to double our capacity of needed critical-care beds.”
In addition to supporting the response to COVID-19, these measures have also ensured that care is available to those with other medical needs, such as cancer, diabetes or heart disease.
During the peak of the coronavirus outbreak, up to 80% to 90% of Kaiser Permanente health-care appointments were made through telemedicine, though Kaiser is working to lower this figure to about 50% going forward.
However, in recent days, the virus rates have increased in Orange County and across the region, and the county is now under the state’s watch list for rising COVID-19 cases.
“Positive tests are up five to eight times, and some of that is because we are doing more tests, but we are also seeing a much greater increase in infected individuals, and that leads to more hospitalizations,” said Costa, noting that there are now three to four times the need for beds than earlier in the spring.
Costa anticipates a different challenge going forward as non-COVID-related health care is resuming, and this will create an added burden as new coronavirus cases are treated. The challenge will increase in the fall, since the flu season will create even higher demand than at present.
“We are still in a good position in terms of demand, but we really need to start to see the curve flatten and go back down,” he said.
Wearing masks, maintaining physical distancing and getting the annual flu vaccine when it comes out in August are steps every resident can take to help the region and nation achieve the best outcomes, Costa and Dunn agreed.
How Businesses Can Open Up Safely
As Orange County professionals slowly return to the office, Dunn said reopening can be achieved safely, “remembering that good health is good business.”
“The confidence that our business leaders have today in opening up and feeling that they will get back to normal is directly proportional to how confident your customers are going to be returning to your place of business and how confident your workers will be that they are coming to a safe place,” she said.
Working with the Orange County Healthcare Agency, the Orange County Business Council is sharing best practices on health care with the county’s professional community, including the necessity of wearing face coverings and following the three required steps to reopen businesses safely in California: finding and following industry-specific guidance, completing and posting the checklist if one is provided at your place of business, and completing and posting an attestation – a document stating that training and implementation of safe practices is complete.
Dunn encourages businesses seeking more information to reach out to the county’s hot line for COVID-19 questions at 714-834-2000 between the hours of 8:30 a.m. and 5 p.m. on non-holiday weekdays.
For More on Economic Forecasts
In addition to the quarterly OCBX reports, the Woods Center produces twice-annual comprehensive economic forecasts covering the local, national and global economies, as well as reports on current economic topics.
Read more of our articles on economic forecasts.