San Diego’s economy is doing all right compared to the rest of the nation was the consensus reached at the University of San Diego’s first Mid-Year Economic Update.
The event, which was held by USD’s Burnham-Moores Center for Real Estate, featured economists Ryan Ratcliff, Kelly Cunningham and Marney Cox. While each of the men focused on various aspects of how the nation’s economic state is affecting the local economy.
Ratcliff, who was the first to speak, formerly authored the UCLA Anderson Forecast and is currently an associate professor of forecasting and economics at USD.
He mainly focused on national and state economics, and pointed to a slight recession in the early 2000s that helped the housing boom that eventually led to the bust.
When the stock market was growing with what Alan Greenspan described as “irrational exuberance,” the United States decided not to temper the growth, but prepare to help the economy when stocks began to fall.
When that started happening in late 2001, the federal government lowered interest rates. While this helped the stock market, it also led to unprecedented growth in the housing sector. Prices boomed and loans were easy to come by.
“When the history is written, historians and economists will decide Wiley Coyote was really the mascot of the last eight years or so,” he said. “Both in terms of strapping ourselves to the housing rocket to get out of the last recession and unfortunately, Wiley Coyote always ends up in the same place: able to sustain hanging over the cliff as long as he doesn’t look down.”
Ratcliff, like Cunningham and Cox, said he does not expect the economy to turn around quickly. He said things would not get back to “normal” until 2013, though the beginnings of recovery are in sight.
Closer to home, Cunningham examined how California and San Diego compare to countries around the world. If you were to include California and San Diego on the list of countries with the largest economies, they would rank eight and 42nd, respectively.
While California is suffering because of job losses and budgetary issues, San Diego has been partially sheltered from the downturn.
“San Diego’s doing comparatively better than the rest of the state,” said Cunningham.
The unemployoment rate statewide is over 10 percent, while Cunningham predicted San Diego will have an unemployment rate at 9.7 percent or 9.8 percent at the highest.
Building on some of Cunningham’s themes, Cox said there are a few reasons for San Diegans to be somewhat optimistic about the coming years.
While he did not say the county can expect large amounts of growth, things like housing prices and employment are stabilizing.
Additionally, he said local Department of Defense projects like Camp Pendleton’s $560 million hospital, will help shore up construction jobs -- one of the hardest-hit local industries.
Even with some positives, Cox said there are still question marks that could throw a wrench in recovery. If consumers remain thrifty or if banks keep excess reserves and do not lend money, it could hamper progress.
At the beginning of the forum, all three economists were asked by Burnham-Moores director Mark Reidy to “look into their crystal balls” to state when they thought the recession would end. However, each made his prediction with a lot of “ifs” and “hopefullys.”
Predicting the future is definitely not easy, said Ratcliff. Cunningham furthered the point, by saying a few years ago hardly anyone could have predicted where the country, state and county would be today.
“I think, out of 10,000 economists, maybe a dozen foresaw this,” he said. “On behalf of all of us, sorry, we were wrong.”