California residents head into 2027 overwhelmingly pessimistic about the economy.
In Orange County, home prices are soaring and residents are facing a cost‑of‑living squeeze that reflects the state’s broader economic woes, said Anil Puri, director of the CSUF Woods Center for Economic Analysis and Forecasting, who presented the 2027 economic forecast with Mira Farka, the center’s co‑director.
The 32nd annual conference, hosted by Cal State Fullerton and the Orange County Business Council, was held Oct. 22 at the Hyatt Regency Irvine.
Puri and Farka addressed national and regional trends across several sectors, with a focus on housing and labor markets.
Orange County’s median home price reached nearly $1.4 million August 2025, up 71% since 2019. While prices have begun to level off — dropping 6.5% since February 2025 — the dream of homeownership remains out of reach for many families.
president and CEO of the Orange County Business Council at the 32nd Annual Economic Forecast Conference (Photo courtesy of Orange County Business Council)
New legislation allowing high‑rise housing near transit hubs may eventually boost supply, but construction levels remain far below historical norms.
“California has a lot of laws that encourage building,” Puri said, including “relaxing the permitting process at the state level. Housing construction has gone up, but we don’t see the impact on pricing. Prices continue to stay steady, if not go up. So we’ll keep tracking it and see what happens in the future.”
Meanwhile, homelessness continues to rise, with Orange County reporting a 28% increase from 2022 to 2024.
Labor‑market recovery remains weak statewide, Puri said. Since the pandemic, California job growth is 3.1%, compared with the national average of 4.6%.
“We are behind in jobs in California compared to the nation as a whole,” Puri said. “But GDP growth in California has been substantial, much higher than the nation as a whole.”
In Orange County, payroll growth has hovered near 0% this year, and the labor force is 1.8% below pre‑pandemic levels.
Food and electricity costs are significantly higher than national averages, and gas prices are already “about a dollar per gallon above the national level,” he said.
AI now accounts for a large share of recent GDP growth in California, rising to 37% of growth in 2025–26, Puri said — but that growth is concentrated among a small share of taxpayers.
Of the world’s 50 leading AI companies, 30 are based in California, and 25% of all AI patents come from scientists and engineers in the state.
“AI in California has brought the talent,” Puri said. “All the engineers and scientists want to come here and work for these companies.”
Puri said AI tools should be integrated into curriculum and assessments in education.
In healthcare, the federal One Big Beautiful Bill Act is poised to slash Medicaid funding nationwide, with California expected to lose $28.4 billion annually. State officials fear as many as 3.4 million residents could lose Medi‑Cal coverage — particularly seniors, low‑income families and undocumented immigrants.
Additional federal policy changes, including mandated semiannual eligibility reviews and work requirements, are likely to force more Californians off healthcare programs, Puri said.
Locally, the Orange County Business Expectations Index climbed to an optimistic 74.4. Still, business leaders remain cautious, with inflation their top concern. One‑third of county executives predict stagflation or recession within two years, Puri said.
California’s economy is holding its ground, Puri said, but the strain is becoming harder to ignore. Southern California and Orange County continue to move forward, yet rising housing costs, cuts to healthcare programs and a tightening labor pool are strengthening headwinds. The year ahead will show whether the region can keep trudging forward or whether those pressures will force a reset.
Delivering the national outlook, Farka said the U.S. is entering a strange new phase she calls “growth‑flation,” an economy running on mid‑2% growth, mid‑3% inflation and mid‑4% unemployment. Instead of recession or stagflation, she said, the nation is stuck in the middle, “looking through a dirty window of cracked glass screens.”
On the upside, the AI boom is real, Farka said. AI investment for 2026 is $730 billion, up 70% from last year.
Nearly half of GDP growth this year, she said, can be traced back to AI‑related spending and wealth.
But the risks are just as large, she said. Growth is “too narrow” and inflation “too broad,” leaving the economy vulnerable to shocks.
Tapping into her trademark humor and optimism, Farka offered one final note: “Don’t stop believing.” The economy, she insists, still has “a few miles left to go.”