Snoozing economy
  • Snoozing economy
  • Story alerts
  • Letter to Editor
  • Pin it

Economic forecasters are befuddled. Will President Trump ignite destructive trade wars? Or will a crackdown on companies shipping jobs overseas jack up employment and stimulate the economy? Will his planned massive tax cuts thrust the economy forward or inflate the deficit so severely that interest rates soar? Will slashing regulation liberate business or generate greed and stupid decision-making that lead to another crash?

San Diego’s median household income last year of $67,320 tops the nation’s $55,775 but only squeaks past California’s $64,500. One reason is the state’s money machine: Silicon Valley.

Will the economy soar from the stimuli or plunge into recession because of high interest rates?

There is a boring possibility: the economy — in the nation and in San Diego County — will be sluggish and unexciting, just as it has been since 2007.

San Diegans boast that posh places like Rancho Santa Fe and Del Mar are proof of the county’s ability to generate income. Those towns have, respectively, median household incomes of $101,250 and $103,457.

Kelly Cunningham, economist for the National University System, says that San Diego County’s total output of goods and services (the regional gross domestic product) will lag next year. The nation’s inflation-adjusted growth will slow to 1.4 percent and San Diego will only come up with 1.2 percent, trailing the state’s 1.7 percent.

Defense spending, which is a bit below 20 percent of the local economy, “has been declining the last three or four years. Trump has talked about more military spending, but I don’t know how fast it will ripple through the economy,” says Cunningham. And it may be a while before any increased military spending is cranked up.

According to Peter Brownell, San Diego will be ahead of the state in minimum wage.

Real estate is about 20 percent of the economy, and the picture is mixed. San Diego housing is among the least affordable in the nation. The median price of a San Diego home is now $500,000, a return to the level of 2006. Today, a San Diegan has to have an income of $108,654 to buy a median-priced home, according to HSH.com, which puts the median home value at a higher $589,300. But median household income in the county was $67,320 last year. And San Diego’s cost of living is 45.7 percent higher than the nation’s. Locals call moderate incomes and high living costs “the sunshine tax,” and it may worsen next year.

Kelly Cunningham, economist for the National University System, says San Diego County’s total output of goods and services (the regional gross domestic product) will lag next year.

Inflation-adjusted household income “has been down for 20 years and will rise slowly,” says Cunningham. “The year 2007 was the high point for [inflation-adjusted] median household income, and we’re still below that and still below the year 2000.”

Technology is 10 percent of local jobs and 20 percent of payroll, because pay is twice as high as in other sectors. Tech should continue doing well, says Cunningham, but he does fear a recession, brought on by higher interest rates. Next year will be the eighth since the end of the Great Recession and the tenth since the beginning of it. San Diego has “never gone beyond ten years” without a recession coming along, he says.

San Diego’s median household income last year of $67,320 tops the nation’s $55,775 but only squeaks past California’s $64,500. One reason is the state’s money machine: Silicon Valley. Its median household income last year was $101,980.

Hotel consultant Jerry Morrison predicts tourism will creep up a hair to only 79 percent in 2017.

San Diegans boast that posh places like Rancho Santa Fe and Del Mar are proof of the county’s ability to generate income. Those towns have, respectively, median household incomes of $101,250 and $103,457.

But look at the median household incomes in towns within Santa Clara County, which embraces the bulk of Silicon Valley: Cupertino, $134,872; Saratoga, $167,917; Los Altos, $157,500; and (gulp) Los Altos Hills, $224,271.

Conclusion: tech pays. San Diego needs more of it.

Mike Stolper of San Diego’s Stolper & Company sees Donald Trump as a reason to buy stocks.

According to Peter Brownell, research director of the Center on Policy Initiatives, 15.6 percent of City of San Diego residents live below the poverty line. However, “we will be ahead of the state in minimum wage,” he says. On January 1, 2017, the city will go to $11.50 and the state (for larger businesses) will go to $10.50.

“Throughout 2017, depending on the size of the business, San Diego will be $1 to $1.50 ahead of the state” in minimum wage, and at least 170,000 people in the city will enjoy that, adding more purchasing power and bolstering the local economy, Brownell says.

Opponents claim the raised minimum wage kills jobs. Brownell disputes that. “Since July, when the city’s minimum wage went up 50 cents, the county added 18,500 jobs. The city accounts for over 60 percent of jobs in the county,” he says. He realizes that there were other factors in the employment increase.

Tourism may be pretty flat in 2017. According to Smith Travel Research, local hotel occupancy has been 78.8 percent through October, up a hair from 78.6 percent for the same period last year. Hotel consultant Jerry Morrison predicts it will creep up to only 79 percent in 2017. “This has not been a wonderful year, and unless there is a big turnaround, I don’t see next year being a heck of a lot better,” says Morrison.

Los Angeles has made some big hotel gains resulting from its spiffying up of the downtown area, and these gains may continue, says Morrison. San Francisco’s average daily room rate through October was $237.62, second only to New York’s $253.28. San Diego’s room rates through the same period were a much lower $157.62.

“Las Vegas is going to eat everybody’s lunch,” says Morrison. Its hotel tax “all goes to promote tourism. More and more people are coming. There is so much convention space. The convention-center rates are still lower than ours.” And, of course, it has a very descriptive and seductive nickname: Sin City.

What about investing? Some analysts think stock and bond prices are very high, and with the economy possibly sagging, the stock market is running out of gas. But Mike Stolper of San Diego’s Stolper & Company sees Donald Trump as a reason to buy stocks.

“Whether you love him or hate him, he is creating the most benevolent business environment since the Eisenhower years,” says Stolper. “We are likely to see more favorable corporate tax rates, less regulation, fewer environmental obstacles — accelerated economic growth and a laissez faire environment.” That will be good for stocks. Higher interest rates won’t interfere with stocks but will hit bonds, thus steering some money to stocks. “We’re not talking 30 or 40 percent gains, but a good year.”

  • Story alerts
  • Letter to Editor
  • Pin it

Comments

AlexClarke Dec. 29, 2016 @ 6:30 a.m.

Trump will accomplish little of what he boast about. The stupid blue collar workers that think he will help them need to look at his past. Trump is and never has been a friend of the working guy. His so-called tax plan only benefits the wealthy. His jobs plan is just more bluff and bluster. He "saved" 800 jobs but the same company shipped 1200 jobs to Mexico. He has not yet chosen a single cabinet person that is friendly to the person who works by the hour or has a lower or middle management job. San Diego will go along and the rich will get richer, the poor will not benefit by an increase in the minimum wage and the middle class will become the working poor.

1

hwstar Dec. 29, 2016 @ 8:19 a.m.

Alex, I agree. The stark realization will come once Trump has been in office for a few months. I just hope the republicans in the senate don't decide to eliminate the filibuster, because I suspect it is going to be used quite a bit.

0

Don Bauder Dec. 29, 2016 @ 10:55 a.m.

hwstar: If the Republicans eliminate the filibuster, even bigger trouble lies ahead. Best, Don Bauder

1

Don Bauder Dec. 29, 2016 @ 10:54 a.m.

AlexClarke: Bernie Sanders was the first to tap into the discontent of American workers and the young. The stunning gap between middle class and upper 1% incomes and wealth are at the bottom of this content. Trump -- as you say, historically unfriendly to workers and the middle/lower classes -- picked up the Sanders beat and told one lie after another, convincing the uninformed voters (greatly white nationalists) that he could fix things. He can't and really has no desire (or political understanding) to do so.

Within two years, he may face impeachment and conviction, as people figure out how they have been duped by a con man. On the other hand, with his luck, he may still be popular. The nation faces a tumultuous immediate future. Best, Don Bauder

1

martygraham619 Dec. 31, 2016 @ 10:20 a.m.

Odd how Trump doesn't talk about the 1 percent. Warren Buffet does.

0

ImJustABill Dec. 29, 2016 @ 4:07 p.m.

The following are "low hanging fruit" - changes to policies which greatly hurt the American working class and which easily could be changed (given the political will)

  1. Stop rampant illegal immigration.
  2. Change trade policies that hurt American manufacturing.
  3. Stop the corruption on Wall St.

What did the 3 most popular candidates offer to the American working class?

Bernie offered 2 & 3

Trump offered 1 & 2

Hillary offered "You are deplorable"

2

Don Bauder Dec. 29, 2016 @ 9:27 p.m.

ImJustABill: Hillary was certainly not going to stop the corruption on Wall Street. Agreed. Bernie, however, would have done his best to stop the frightening income and wealth gap. Trump, on the other hand, will exacerbate it. That is one reason for the stock market's strong performance since his election. Best, Don Bauder

1

Don Bauder Dec. 29, 2016 @ 9:30 p.m.

Mickey Alcantara: You have swallowed Donald Trump whole.. Yes, he talked a good game. But examine what he proposes: he claimed in the campaign that he would fight for the little guy -- to boost average and below-average incomes. But his tax plan slashes taxes of the rich and of corporations -- just the opposite of his rhetoric. Best, Don Bauder

0

Visduh Dec. 31, 2016 @ 10:13 a.m.

Over more years than I care to admit, we have had presidential elections with candidates who proclaimed they were looking out for the little guy/gal. Generally they didn't win. The first one who comes to mind was McGovern in 1972. Then we had some flavor of that with Carter in 1976. The next time it seemed to rear up was in 1992 with Perot. I can remember how many people, even including some government employees, saying they voted for him because he was the only candidate who was going to serve the ordinary people. A vote for him was a vote thrown away. That year Billy-boy was also selling "chainge" (my attempt to mimic his Arkansas twang.) Next time was in 2008 and Bam was selling "hope and change." I suppose that there was some change as far as the Affordable Health Act goes, but plenty of people didn't like what it did. Now we have Trump, and the undercurrent in his voters was a desire for change.

Over and over the voters want change, and either they get it in a way they didn't hope for, or they didn't get change at all. Will it be any different this time? Don't hold your breath.

0

AlexClarke Dec. 31, 2016 @ 6:09 p.m.

Well said and so true. Sad that the average voter is so stupid.

0

Don Bauder Jan. 1, 2017 @ 10:04 a.m.

AlexClarke: There is no question that Trump was elected by low-information voters. It will take them longer to figure out that they have been conned, because they won't be paying attention. Best, Don Bauder

0

Don Bauder Jan. 1, 2017 @ 10:02 a.m.

Visduh: There is no way to forecast what will happen under Trump. He is a master at saying what he senses an audience wants to hear. So he made all kinds of contradictory promises during the campaign. We know that one of his promises is fraudulent: he says he is for "the little guy." Nonsense. He has no interest in middle- or low-income people.

One of our biggest economic problems is the declining standard of living of the middle- and low-income classes, while the superrich hog all the income gains. This has been going on for decades and will get worse during a Trump administration. Best, Don Bauder

0

MURPHYJUNK Dec. 30, 2016 @ 7:05 a.m.

I think once the panic and predictions settle down things will remain about the same as now

0

Don Bauder Dec. 30, 2016 @ 8:30 a.m.

Murphyjunk: That could possibly be true. I would bet on political and social turmoil, but a rather unexciting economy, at least this year. Best, Don Bauder

0

Don Bauder Jan. 1, 2017 @ 10:08 a.m.

martygraha619: The major piece here -- the column about the San Diego economy -- was written by yours truly, Don Bauder. I guess that isn't clear. Best, Don Bauder

0

Don Bauder Jan. 1, 2017 @ 10:10 a.m.

Ah-Ha Rancho Santa Fe: It is both amazing and depressing how many people watch Fox news. Best, Don Bauder

0

Sign in to comment

Win a $25 Gift Card to
The Broken Yolk Cafe

Join our newsletter list

Each newsletter subscription means another chance to win!

Close