Chapman Economist Predicts Modest Growth for 2026

Chapman University’s president emeritus, James Doti, has projected a modest economic growth for 2026. The forecast anticipates a GDP increase of 2%, following a slow growth trend in previous years.

Economic Predictions for 2026

Doti and his team initially forecasted a GDP decrease to 1.8% for 2025, down from 2.7% in 2024. The current projection indicates a slight upswing in growth for 2026.

Impact of Tariffs on Economic Growth

Doti attributed some economic limitations to former President Donald Trump’s tariffs, suggesting they deterred population growth in California and hindered economic expansion. He emphasized the need for lower taxes to improve the economy, stating, “The focus needs to be on reducing taxes.”

Inflation and Job Growth Concerns

Inflation is projected to rise from 3% to 3.3% by mid-2026, then settle back to 3.1% by year-end. Despite this, job growth in California remains dismal, with a mere 2% increase recorded from mid-2022 to mid-2023. Doti noted that California ranks 48th in job growth among the 50 states.

• Forecasted job growth for California in 2026: 0.3% (approximately 62,000 jobs).
• Decline in advanced industries: Jobs in high-value sectors fell from 17.5% in 2018 to 14.9% in early 2025.
• Orange County’s job growth during the post-pandemic period: 1.6%.

Sector Analysis

The education and health sector is predicted to see a notable growth of 3.8% in Orange County. This growth is primarily due to new medical facilities, such as:

• City of Hope’s new 73-bed cancer hospital in Irvine.
• UCI Health’s 144-bed hospital with 1,800 staff members.
• Upcoming expansion of Hoag’s Sun Family Campus.

Real Estate Market Forecast

The Federal Reserve’s recent decision to lower interest rates three times within the year indicates concerns about job market stability. Despite lower mortgage rates potentially increasing housing affordability, Doti warns that the real estate market remains soft.

• Forecast for new residential construction permits in 2026: approximately 8,000 units.
• Projected increase in multifamily unit permits from 51.9% in 2022 to 68.2% in 2026.

Population Considerations

Population trends will significantly influence future construction activities. Factors such as immigration rates and domestic migration will impact housing demand. In 2021, Orange County experienced a decrease in population by nearly 24,000.

While mortgage rates are expected to decline, lower immigration and birth rates may suppress housing demand. Overall, the economic outlook from Chapman indicates a cautious approach to growth for 2026.