Economists at Cal State Fullerton report that Orange County business leaders expect to increase wages during the current quarter, which began October 1. The survey also indicates a general rise in optimism among executives regarding the local economy.
The findings, released last week by economists led by Woods Center director Anil Puri, reflect expectations for the final three months of the year. This sentiment mirrors that of the previous quarter, which also saw executives express growing optimism about the economic future.
A substantial increase in executives anticipating higher wages for the final three months of the year was noted. Nearly 56% of surveyed executives expect wages to rise, up from almost 42% in the preceding quarter. Approximately 40% of respondents foresee wages remaining unchanged. This indicates a tightening labor market or increased competition for workers within Orange County, affecting residents who are employed locally.
The Orange County Business Expectations Index (OCBX), a key measure from the researchers, rose to 70.2% for the quarter starting October 1. This marks an increase from 62.9% in the previous quarter. A score exceeding 50% generally signals expectations for future economic growth within Orange County. This upward trend suggests a more positive outlook for business activity across the region, which includes Irvine. Slightly more than one-third of executives now expect regional industry activity to increase, an improvement from 25% in the previous quarter.
Despite this increased optimism, inflation continues to be the foremost concern for Orange County businesses. Fuel costs rank as the second leading concern, highlighting the impact of energy prices on operational expenses. The survey's release came as U.S. inflation was running at a 3.4% annual rate in August, exceeding the Federal Reserve’s 2% target.
Local residents are directly impacted by rising fuel costs, with the average price of gasoline in Orange County reported at approximately $6.405 per gallon by AAA as of September 30. This is significantly higher than the nationwide average price of $4.43 per gallon on the same date, a figure influenced by crude oil delivery difficulties. The ongoing war against Iran and its potential effects on oil supply contribute to this volatility.
Interest rates and tariffs tied for the third most significant concern among business leaders. These were followed by government deficits, the ongoing conflict in Iran, and the potential for a stock market decline. Researchers noted that “These issues are contributing to uncertainty and are likely to continue shaping business decisions,” acknowledging the complex landscape businesses are navigating.
The local job market in Orange County showed an unemployment rate of 4.4% in August, a slight increase from 4.2% in July. While indicating a generally low unemployment environment, the change suggests some minor shifts in employment figures.
The quarterly survey was conducted in partnership with the Orange County Business Council. Researchers obtained an effective response rate of 18% from approximately 300 business professionals who were contacted by email between September 16 and 25. Woods Center director Anil Puri led the team of economists responsible for compiling these quarterly business expectations. The survey's consistent reporting of executive sentiment provides a regular gauge of the economic environment within Orange County, offering insight into the factors driving business decisions and affecting the daily lives of residents.
What happens next? Businesses will continue to monitor inflation and fuel costs, adjusting their strategies based on these ongoing concerns and the broader economic outlook. The expectation of higher wages could lead to increased purchasing power for some residents, while businesses may pass on increased labor and fuel costs, potentially affecting consumer prices. These dynamics will continue to influence the economic conditions faced by Irvine residents in the coming months.
