San Diego County:

Region’s Solid Economic Growth Continues Amid Housing and Labor Issues

San Diego County’s economic growth is slowing down. However, the county is still on track to relatively outpace several other regions across the state in 2020 and possibly 2021 as job creation, investment capital, and a unique business environment remain important drivers of commercial and consumer activity.

That’s according to the most recent forecasts presented and published by the San Diego Institute for Economic Research, Beacon Economics, San Diego Association of Governments, University of San Diego, San Diego Regional Economic Development Corp., San Diego Workforce Partnership, Wells Fargo, and Robert Half & Co. The keynote speakers’ opinions spotlight intriguing viewpoints, trends and projections so your credit union can plan appropriately.

‘36th Annual San Diego County Economic Roundtable’
Presented on Feb. 5 by experts from Beacon Economics, the San Diego Association of Governments, University of San Diego, San Diego Regional Economic Development Corp., and San Diego Workforce Partnership:

Although San Diego County’s economy continues to advance and the labor market remains tight, weak labor force growth and a tight housing market present a challenge for growth in the long run. Despite home price appreciation beginning to moderate and sales picking up in response to downward-trending mortgage rates, homeownership remains out of reach for many would-be buyers.

San Diego County’s labor force growth, which has remained weak following the recession, picked up slightly in late 2018 — but it has since decelerated back below its 0.6 percent post-recession average. From October 2018 to October 2019, the region’s labor force (pool of adults willing and able to work) grew 0.3 percent, trailing the Inland Empire (0.4 percent) but outpacing Los Angeles (-0.2 percent) and Orange County (-0.4 percent). Furthermore, constrained growth in the available labor supply places downward pressure on the unemployment rate, which has continued its steady decline and was 2.9 percent in October 2019, a full percentage point below the statewide average (3.9 percent). An expanding labor market is crucial to the region’s long-run growth. “With labor force growth stagnating, San Diego must rely on attracting workers from neighboring counties,” the forecast report states. “But a tight housing market is a barrier to many would-be residents.”

San Diego County’s jobs-to-housing ratio, a static measure of jobs per housing unit, has steadily increased since 2011 and stands at 1.24. This is lower than Los Angeles County (1.74) and Orange County (1.51), but higher than in the Inland Empire (0.97). A more relevant measure of the amount of housing necessary to accommodate recent economic growth is this jobs-to-housing ratio, which captures the change in the number of jobs relative to the change in additional housing units. This measure represents the relationship between the labor market’s need for housing relative to actual available housing over time. The jobs-to-housing ratio for 2011 to 2019 was 3.53, significantly higher than the 1.24 static measure, illustrating the chronic lack of housing relative to the expanding labor market. The labor market is a primary driver of the San Diego economy. If housing does not match the expansion of the labor market, San Diego won’t be able to attract enough workers, which is of crucial importance given the stalled post-recession labor force growth. The failure of housing to keep pace with the needs of the labor market presents a long-term challenge to growth in the region.

Furthermore, low- and moderate-income housing remains a key issue in San Diego County and the state. Many regions across the state — San Diego included — are falling behind their state-mandated housing goals. Although multifamily construction activity is providing some relief in San Diego, the vast majority of building permits are geared toward those earning above the median household income. In fact, the share of lower-income rental stock (B and C-class units) has trended down since the recession.

For more trends: Click here for the “San Diego County Regional Intelligence Report;” click here for the “Economic Outlook: Focus on San Diego” slideshow presentation; and click here for the entire video archive of the event.

‘San Diego 2020 Economic Outlook’ Report
Released on Jan. 22 by Kelly Cunningham, senior economist at the San Diego Institute for Economic Research:

Indicators of San Diego County’s economic activity clearly trend toward a slowing momentum even with the region continuing to slightly edge the state and nation’s economic performance. Significant indications of population, employment, residential construction, and consumer sales consistently show diminishing growth. Unemployment and inflation are also projected to rise over the coming year. However, even though further slowing is projected for 2020, local economic momentum will continue to outperform California and the United States. “This forecast anticipates recession being averted during the year, although the economy falls perilously close,” states the forecast report.

San Diego County’s economy continues to be most prominently led by key business technology sectors, including the biotech, healthcare, and software industries. San Diego was recently named by the Brookings Institute among just five metropolitan areas across the United States (with Boston, San Francisco, Seattle and San Jose) accounting for 90 percent of all U.S. high-tech job growth in the past decade and half.

Revised estimates show how San Diego County’s “local” gross domestic product (GDP) exceeded the nation’s economic expansion every year since 2012. San Diego’s 4.4 percent annual GDP gain in 2018 (the strongest since 2005) was also slightly higher than the rest of California at 4.3 percent, as well as the nation at 2.9 percent. With slightly stronger job growth recorded in 2019, San Diego’s economic momentum is estimated to have exceeded the past year as well.

For more local San Diego County trends: click here. The forecast report gives more information and analysis on local housing market challenges, home affordability issues, inflation, taxable sales, economic indicators, slowing job growth, fading population gains, and more.

‘2020 Economic Trends’ Conference
Presented on Jan. 22 by experts from Wells Fargo, Robert Half & Co., and the San Diego Regional Economic Development Corp.:

The San Diego Business Journal pulled together local experts and published their insights: click here to read the following articles: "One Economist's View: The Numbers Point to Growth, Albeit Slow Growth;” "San Diego Economy Grows and Changes, Yet Challenges Persist;” "Despite a Strong Economy, Insurance Companies Must Weather a Storm;” "With Rising Health Care Costs, Leaders Think About Stemming Demand;” "With the Right Skill Sets, Talent Can Write Its Own Ticket;” "Businesses Can Use Resources to Help Us Meet Childcare Challenges;” and "Housing Appreciation May Slow; Office Market to Follow Economy's Trajectory.”

San Diego Quarterly Economic Snapshot
Click here
to view the latest "San Diego Quarterly Economic Snapshot" (published by the San Diego Regional Economic Development Organization), which analyzes key economic indicators that are important to understanding the regional economy and the region’s standing relative to the 25 most populous metropolitan areas in the U.S.

Allen Matkins/UCLA Anderson Forecast
View the latest Allen Matkins/UCLA Anderson Forecast Commercial Real Estate Survey for trends and projections across all local California commercial real estate markets (office, industrial, retail, and multi-family apartments).

Local Home Affordability Vs. Job Growth
The National Association of Realtors recently released a study (“Home Affordability Index Ranking and Payroll Job Growth") showing trends in how local housing affordability can contribute to slower local job growth by employers. View the data table for local metropolitan information in California.

Local Migration and Population Change’s Impact
Within one of Harvard University Joint Center for Housing Studies' latest research endeavors — "Losing Residents but Still Growing” — you can understand how the components of population change differ by county, as well as exactly how each community is evolving and where people are drawn to when they move. As the county-by-county map shows, many large central metro counties are attracting numerous international migrants, while many nearby suburban areas (referred to as “large fringe metros”) are attracting sizable numbers of domestic migrants. Counties in many high-cost metropolitan areas are losing more domestic migrants than they are gaining. Indeed, of the 100 most populous US metros, four of the five with the highest rates of renter cost burdens also have negative domestic migration.

Local County-Level Perspectives
The California Department of Transportation (Caltrans) has released its updated 2019 – 2050 demographic forecast for all counties in California regarding local jobs, wages, home prices, population, personal income, taxable sales, net migration, wildfire issues, public policy implications, legal cannabis, industries, workforce, and more. For forecasting purposes, the shorter-term economic projections for 2019 – 2024 within this annual county-wide report by Caltrans do not factor in an economic recession into its local scenarios. They are only highlights stemming from a baseline projection (view the report above for more information).

San Diego County Occupational/Industry Trends
Additionally, download Chmura Economics and Analytics’ latest San Diego County Economic Overview to see 10-year future trends in worker occupations, employment, wages, cost of living, and industries.

Your Local Region’s GDP: 2001 - 2018
The U.S. Bureau of Economic Analysis has released an overview and history on "Local Area Gross Domestic Product from 2001 - 2018" for individual counties in California and the entire nation. It includes highlights and trend breakdowns for large, medium and small-population size counties, as well as the U.S. dollar size of economies for each county. Tables and files are included for download and review.

Latest CA Population and Demographic Trends
The California Department of Finance has released its latest news — "State's Population Increases by 141,300 While Rate of Growth Continues to Decline" regarding 2018 to 2019 population growth, which includes highlights and snapshot trends of each county and region across the state. (You can also download the long-term 2010 to 2019 demographic tables by clicking here). Also, the department's deeper demographic breakdown (age, race, income, employment, poverty, health care, education, and social/housing characteristics) — courtesy of the American Community Survey by the U.S. Census Bureau — can be found by clicking here.

County Income and Poverty Estimates
The U.S. Census Bureau has released its "Small Area Income and Poverty Estimates (SAIPE) Program", which gives single-year estimates of income and poverty for all counties in California and the entire nation — as well as estimates of school-age children in poverty for all 13,000-plus school districts.

Demographic Profile and Projections: San Diego County*

  • Total population: 3.3 million (and will hit 3.5 million by 2025).
  • Working-age individuals (15 - 64 years old): 67 percent of total population in 2015 (and will remain 67 percent by 2025).
  • Labor force (at least 16 years old who are working/looking for a job): 1.6 million out of 2.6 million adult population.
  • Labor force participation rate (adults who “want” to work): 61 percent (or 1.6 million individuals).
  • Unemployment rate: 2.8 percent (versus 3.9 in CA and 3.5 in U.S.)
  • Unemployed workers: 44,800.
  • Median household income: $79,100 as of 2019 (compared to $71,800 for CA and $60,400 for U.S.)
  • Poverty rate: 13 percent (versus 15 in CA and 13 in U.S.)
  • Education of population: 36 percent have a college degree; 31 percent some college; 19 percent high school diploma; and 14 percent no high school diploma.
  • Employment sector growth: click here for a local future growth breakdown (2014 – 2024) of nonfarm job projections by industry, occupation, education, and fastest-versus-largest areas of importance in the San Diego-Carlsbad metropolitan region.
  • * Data as of January 2020 from the California Center for Jobs and the Economy; California Employment Development Department; California Department of Finance; Federal Reserve Bank of St. Louis; U.S. Bureau of Economic Analysis; and U.S. Census Bureau

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