Anchor ads are not supported on this page.

4S Ranch Allied Gardens Alpine Baja Balboa Park Bankers Hill Barrio Logan Bay Ho Bay Park Black Mountain Ranch Blossom Valley Bonita Bonsall Borrego Springs Boulevard Campo Cardiff-by-the-Sea Carlsbad Carmel Mountain Carmel Valley Chollas View Chula Vista City College City Heights Clairemont College Area Coronado CSU San Marcos Cuyamaca College Del Cerro Del Mar Descanso Downtown San Diego Eastlake East Village El Cajon Emerald Hills Encanto Encinitas Escondido Fallbrook Fletcher Hills Golden Hill Grant Hill Grantville Grossmont College Guatay Harbor Island Hillcrest Imperial Beach Imperial Valley Jacumba Jamacha-Lomita Jamul Julian Kearny Mesa Kensington La Jolla Lakeside La Mesa Lemon Grove Leucadia Liberty Station Lincoln Acres Lincoln Park Linda Vista Little Italy Logan Heights Mesa College Midway District MiraCosta College Miramar Miramar College Mira Mesa Mission Beach Mission Hills Mission Valley Mountain View Mount Hope Mount Laguna National City Nestor Normal Heights North Park Oak Park Ocean Beach Oceanside Old Town Otay Mesa Pacific Beach Pala Palomar College Palomar Mountain Paradise Hills Pauma Valley Pine Valley Point Loma Point Loma Nazarene Potrero Poway Rainbow Ramona Rancho Bernardo Rancho Penasquitos Rancho San Diego Rancho Santa Fe Rolando San Carlos San Marcos San Onofre Santa Ysabel Santee San Ysidro Scripps Ranch SDSU Serra Mesa Shelltown Shelter Island Sherman Heights Skyline Solana Beach Sorrento Valley Southcrest South Park Southwestern College Spring Valley Stockton Talmadge Temecula Tierrasanta Tijuana UCSD University City University Heights USD Valencia Park Valley Center Vista Warner Springs

San Diego won’t be any more affordable next year

Economy could go up — or blow up

San Diego economy should be modestly softer next year
San Diego economy should be modestly softer next year
Kelly Cunningham

"The weakest recovery in history will not become the longest in history.” Thus speaks Kelly Cunningham, economist for the National University System Institute for Policy Research.

From late 2007 to early 2009, the United States and San Diego went through the worst economic downturn since the Great Depression. Then came the most anemic recovery ever. Cunningham is not predicting that 2016 will be a disastrous year for the San Diego economy, but he thinks it will be a little weaker than 2015.

He is warning San Diegans not to expect the local economy to bounce back vigorously. “There is no reason to believe that in the seventh year of this weak recovery, things will accelerate,” says Cunningham. For example, San Diego County added 40,000 jobs in 2015, “the best performance since 1999.” Next year, the figure may be 34,000 jobs, “and a lot will be low-paying jobs.”

For many years, the military accounted for more than 20 percent of the San Diego economy. That included uniformed personnel, civilians working on bases, retirement pay, base construction and maintenance, and aerospace-defense manufacturing. Beginning in 2011, that came down and is now less than 20 percent. San Diego is a leading drone maker, but it has more work to do in transferring output to cybersecurity and the war on terrorism.

Similarly, real estate for years was 22 percent of the economy. That included sales, renting, leasing, and construction. “It’s now less than 22 percent but hasn’t dropped below 20 percent,” says Cunningham.

Sponsored
Sponsored

Robert Campbell, producer of the Campbell Real Estate Timing Letter, thinks that, for the next several months, or possibly a good deal longer, the housing boom will continue. That’s what his statistical indicators are telling him. Residential real estate was in a huge bubble before the 2008 crash. Then, when the Federal Reserve frenetically printed money in early 2009, interest rates plunged, and housing made a big rebound.

But this strong housing market has been a result of hyper-rapid money and credit creation by the Federal Reserve. “By holding short-term interest rates near 0.0 percent for six straight years, the [Federal Reserve] has been pushing savers into real estate and the stock market,” says Campbell. This rapid money printing “boosts asset prices — and not the economy.” Buckle your seatbelt: “We may be in the early stages of a global stock market and asset market crash.”

Most analysts have a moderate view similar to Cunningham’s, or even one that is more optimistic, but there are some very intelligent economists and analysts who share Campbell’s fears of another bubble exploding.

San Diego’s annual economic output per person is last among 20 large cities.

And there is still another scary view: the stark chasm between the superrich and the rest of us spells economic danger. Joel Kotkin of Chapman University fears California is becoming a “feudal society” of rich and poor. Los Angeles, Oakland, Sacramento, Long Beach, and Riverside have very high poverty levels, according to a study by the National Resource Network. And, of course, San Bernardino, Stockton, and Vallejo have been forced into bankruptcy.

Peter Brownell

San Diego has similar problems, says Peter Brownell, research director of the Center on Policy Initiatives. The San Diego metro area poverty rate in 2014 was 14.7 percent, an improvement over the Los Angeles area’s 17.3 percent. Next year, San Diego should show “some slow improvement in poverty,” hopes Brownell. California’s minimum wage rises to $10 per hour in January. In June, San Diegans go to the ballot on an initiative that would raise the minimum to $11.50 in 2017, with later increases indexed to inflation beginning in 2019.

“Two-thirds of the county workforce works in [the city of] San Diego,” says Brownell. “That should make a positive difference. What is being proposed is more moderate than in other places; my impression is that people understand how high the cost of living is, and a pretty strong majority is willing to support a moderate increase in the living wage.”

A higher minimum wage should lessen the income and wealth inequality that has harmed San Diego, says Brownell. His forecast for the 2016 economy: “I don’t see much change from 2015, but I am hopeful for an increase in the minimum wage.”

Cunningham points out some problems: “Between 2011 and 2014 only 26,000 homes were built in San Diego, but we added 122,000 jobs. So, five times as many jobs have been added as homes built. It’s usually a 2 to 1 ratio. The housing market is becoming very tight; we are not building enough to accommodate the housing requirements.”

Retail sales have picked up, says Cunningham, but even including online sales, “We have still not recovered to where we were before the recession,” he says. One major reason: median household income, adjusted for inflation, is lower than it was in 2006 and 2007.

San Diego population has been about flat for the past decade

Population growth is “less than 1 percent a year,” says Cunningham, who can remember the boom years of the 1980s, when population would rise 3 percent in one year. “Domestic migration is still negative. More people are moving out [to domestic locations] than are moving in, although international migration is picking up.”

Adjusted for inflation, median household income is not yet back to pre–Great Recession levels.

San Diego incomes are higher than those in most major U.S. metropolitan areas, but the cost of living is third highest among the nation’s major metro areas. Household income is 23 percent higher than the nation’s, but the cost of living is 42 percent higher. Housing affordability is one of the nation’s worst. That’s a reason that domestic migration outflow tops inflow: how many families can afford San Diego?

Salaries are highest in tech jobs, and tech should continue to be more than 15 percent of the total economy. However, the loss of Qualcomm jobs, a result of announced layoffs last summer, will be a problem. “I find it hard to believe that all of [the people laid off by Qualcomm] will find other tech jobs in San Diego,” says Cunningham.

Jerry Morrison

This year has been excellent for the hotel business, says Jerry Morrison of Morrison & Company. But, San Diego hotels “have definitely been trailing Los Angeles and San Francisco.” Morrison believes “we will eventually lose Comic-Con, as its needs expand.” He thinks San Diego needs a convention center with a contiguous expansion. All told, “It looks like a very strong 2016” for the hotel industry, he says.

The latest copy of the Reader

Please enjoy this clickable Reader flipbook. Linked text and ads are flash-highlighted in blue for your convenience. To enhance your viewing, please open full screen mode by clicking the icon on the far right of the black flipbook toolbar.

Here's something you might be interested in.
Submit a free classified
or view all
Previous article

Extended family dynamics

Many of our neighbors live in the house they grew up in
Next Article

The vicious cycle of Escondido's abandoned buildings

City staff blames owners for raising rents
San Diego economy should be modestly softer next year
San Diego economy should be modestly softer next year
Kelly Cunningham

"The weakest recovery in history will not become the longest in history.” Thus speaks Kelly Cunningham, economist for the National University System Institute for Policy Research.

From late 2007 to early 2009, the United States and San Diego went through the worst economic downturn since the Great Depression. Then came the most anemic recovery ever. Cunningham is not predicting that 2016 will be a disastrous year for the San Diego economy, but he thinks it will be a little weaker than 2015.

He is warning San Diegans not to expect the local economy to bounce back vigorously. “There is no reason to believe that in the seventh year of this weak recovery, things will accelerate,” says Cunningham. For example, San Diego County added 40,000 jobs in 2015, “the best performance since 1999.” Next year, the figure may be 34,000 jobs, “and a lot will be low-paying jobs.”

For many years, the military accounted for more than 20 percent of the San Diego economy. That included uniformed personnel, civilians working on bases, retirement pay, base construction and maintenance, and aerospace-defense manufacturing. Beginning in 2011, that came down and is now less than 20 percent. San Diego is a leading drone maker, but it has more work to do in transferring output to cybersecurity and the war on terrorism.

Similarly, real estate for years was 22 percent of the economy. That included sales, renting, leasing, and construction. “It’s now less than 22 percent but hasn’t dropped below 20 percent,” says Cunningham.

Sponsored
Sponsored

Robert Campbell, producer of the Campbell Real Estate Timing Letter, thinks that, for the next several months, or possibly a good deal longer, the housing boom will continue. That’s what his statistical indicators are telling him. Residential real estate was in a huge bubble before the 2008 crash. Then, when the Federal Reserve frenetically printed money in early 2009, interest rates plunged, and housing made a big rebound.

But this strong housing market has been a result of hyper-rapid money and credit creation by the Federal Reserve. “By holding short-term interest rates near 0.0 percent for six straight years, the [Federal Reserve] has been pushing savers into real estate and the stock market,” says Campbell. This rapid money printing “boosts asset prices — and not the economy.” Buckle your seatbelt: “We may be in the early stages of a global stock market and asset market crash.”

Most analysts have a moderate view similar to Cunningham’s, or even one that is more optimistic, but there are some very intelligent economists and analysts who share Campbell’s fears of another bubble exploding.

San Diego’s annual economic output per person is last among 20 large cities.

And there is still another scary view: the stark chasm between the superrich and the rest of us spells economic danger. Joel Kotkin of Chapman University fears California is becoming a “feudal society” of rich and poor. Los Angeles, Oakland, Sacramento, Long Beach, and Riverside have very high poverty levels, according to a study by the National Resource Network. And, of course, San Bernardino, Stockton, and Vallejo have been forced into bankruptcy.

Peter Brownell

San Diego has similar problems, says Peter Brownell, research director of the Center on Policy Initiatives. The San Diego metro area poverty rate in 2014 was 14.7 percent, an improvement over the Los Angeles area’s 17.3 percent. Next year, San Diego should show “some slow improvement in poverty,” hopes Brownell. California’s minimum wage rises to $10 per hour in January. In June, San Diegans go to the ballot on an initiative that would raise the minimum to $11.50 in 2017, with later increases indexed to inflation beginning in 2019.

“Two-thirds of the county workforce works in [the city of] San Diego,” says Brownell. “That should make a positive difference. What is being proposed is more moderate than in other places; my impression is that people understand how high the cost of living is, and a pretty strong majority is willing to support a moderate increase in the living wage.”

A higher minimum wage should lessen the income and wealth inequality that has harmed San Diego, says Brownell. His forecast for the 2016 economy: “I don’t see much change from 2015, but I am hopeful for an increase in the minimum wage.”

Cunningham points out some problems: “Between 2011 and 2014 only 26,000 homes were built in San Diego, but we added 122,000 jobs. So, five times as many jobs have been added as homes built. It’s usually a 2 to 1 ratio. The housing market is becoming very tight; we are not building enough to accommodate the housing requirements.”

Retail sales have picked up, says Cunningham, but even including online sales, “We have still not recovered to where we were before the recession,” he says. One major reason: median household income, adjusted for inflation, is lower than it was in 2006 and 2007.

San Diego population has been about flat for the past decade

Population growth is “less than 1 percent a year,” says Cunningham, who can remember the boom years of the 1980s, when population would rise 3 percent in one year. “Domestic migration is still negative. More people are moving out [to domestic locations] than are moving in, although international migration is picking up.”

Adjusted for inflation, median household income is not yet back to pre–Great Recession levels.

San Diego incomes are higher than those in most major U.S. metropolitan areas, but the cost of living is third highest among the nation’s major metro areas. Household income is 23 percent higher than the nation’s, but the cost of living is 42 percent higher. Housing affordability is one of the nation’s worst. That’s a reason that domestic migration outflow tops inflow: how many families can afford San Diego?

Salaries are highest in tech jobs, and tech should continue to be more than 15 percent of the total economy. However, the loss of Qualcomm jobs, a result of announced layoffs last summer, will be a problem. “I find it hard to believe that all of [the people laid off by Qualcomm] will find other tech jobs in San Diego,” says Cunningham.

Jerry Morrison

This year has been excellent for the hotel business, says Jerry Morrison of Morrison & Company. But, San Diego hotels “have definitely been trailing Los Angeles and San Francisco.” Morrison believes “we will eventually lose Comic-Con, as its needs expand.” He thinks San Diego needs a convention center with a contiguous expansion. All told, “It looks like a very strong 2016” for the hotel industry, he says.

Comments
Sponsored

The latest copy of the Reader

Please enjoy this clickable Reader flipbook. Linked text and ads are flash-highlighted in blue for your convenience. To enhance your viewing, please open full screen mode by clicking the icon on the far right of the black flipbook toolbar.

Here's something you might be interested in.
Submit a free classified
or view all
Previous article

Temperature inversions bring smoggy weather, "ankle biters" still biting

Near-new moon will lead to a dark Halloween
Next Article

Gonzo Report: Three nights of Mission Bayfest bring bliss

“This is a top-notch production.”
Comments
Ask a Hipster — Advice you didn't know you needed Big Screen — Movie commentary Blurt — Music's inside track Booze News — San Diego spirits Classical Music — Immortal beauty Classifieds — Free and easy Cover Stories — Front-page features Drinks All Around — Bartenders' drink recipes Excerpts — Literary and spiritual excerpts Feast! — Food & drink reviews Feature Stories — Local news & stories Fishing Report — What’s getting hooked from ship and shore From the Archives — Spotlight on the past Golden Dreams — Talk of the town The Gonzo Report — Making the musical scene, or at least reporting from it Letters — Our inbox Movies@Home — Local movie buffs share favorites Movie Reviews — Our critics' picks and pans Musician Interviews — Up close with local artists Neighborhood News from Stringers — Hyperlocal news News Ticker — News & politics Obermeyer — San Diego politics illustrated Outdoors — Weekly changes in flora and fauna Overheard in San Diego — Eavesdropping illustrated Poetry — The old and the new Reader Travel — Travel section built by travelers Reading — The hunt for intellectuals Roam-O-Rama — SoCal's best hiking/biking trails San Diego Beer — Inside San Diego suds SD on the QT — Almost factual news Sheep and Goats — Places of worship Special Issues — The best of Street Style — San Diego streets have style Surf Diego — Real stories from those braving the waves Theater — On stage in San Diego this week Tin Fork — Silver spoon alternative Under the Radar — Matt Potter's undercover work Unforgettable — Long-ago San Diego Unreal Estate — San Diego's priciest pads Your Week — Daily event picks
4S Ranch Allied Gardens Alpine Baja Balboa Park Bankers Hill Barrio Logan Bay Ho Bay Park Black Mountain Ranch Blossom Valley Bonita Bonsall Borrego Springs Boulevard Campo Cardiff-by-the-Sea Carlsbad Carmel Mountain Carmel Valley Chollas View Chula Vista City College City Heights Clairemont College Area Coronado CSU San Marcos Cuyamaca College Del Cerro Del Mar Descanso Downtown San Diego Eastlake East Village El Cajon Emerald Hills Encanto Encinitas Escondido Fallbrook Fletcher Hills Golden Hill Grant Hill Grantville Grossmont College Guatay Harbor Island Hillcrest Imperial Beach Imperial Valley Jacumba Jamacha-Lomita Jamul Julian Kearny Mesa Kensington La Jolla Lakeside La Mesa Lemon Grove Leucadia Liberty Station Lincoln Acres Lincoln Park Linda Vista Little Italy Logan Heights Mesa College Midway District MiraCosta College Miramar Miramar College Mira Mesa Mission Beach Mission Hills Mission Valley Mountain View Mount Hope Mount Laguna National City Nestor Normal Heights North Park Oak Park Ocean Beach Oceanside Old Town Otay Mesa Pacific Beach Pala Palomar College Palomar Mountain Paradise Hills Pauma Valley Pine Valley Point Loma Point Loma Nazarene Potrero Poway Rainbow Ramona Rancho Bernardo Rancho Penasquitos Rancho San Diego Rancho Santa Fe Rolando San Carlos San Marcos San Onofre Santa Ysabel Santee San Ysidro Scripps Ranch SDSU Serra Mesa Shelltown Shelter Island Sherman Heights Skyline Solana Beach Sorrento Valley Southcrest South Park Southwestern College Spring Valley Stockton Talmadge Temecula Tierrasanta Tijuana UCSD University City University Heights USD Valencia Park Valley Center Vista Warner Springs
Close

Anchor ads are not supported on this page.

This Week’s Reader This Week’s Reader