SD Economy Showing Positive Signs
Download this video (21.0 MB, MP4 format)
July 2, 2010 – Unemployment is still high, consumer spending is slow to return. How will we know when this recession is over?
Related story: SD Economy Showing Positive Signs
GLORIA PENNER (Host): On another subject, while the local economy has been signs of improvement, one in ten San Diegans are still unemployed. Will things continue to improve or are we headed for a double-dip recession? We asked Alan Gin, author of the USD Index of Leading Economic Indicators to give us his outlook for San Diego. Here’s what he said. ALAN GIN (Professor of Economics, USD): There’s concern at the national level that we’re going to have what economists call a double-dip recession. Where the economy takes a downturn again. But I think we’ll be able to avoid that here in San Diego. I think we’re well positioned in terms of the sectors of the economy that we’re emphasizing. I think that will help us, both in the short-term and in the long- term. Any sort of rebound in consumer confidence is important because consumer spending is typically two-thirds of economic activity. So, what we’re going to need then is for the consumer to come back in order to create some jobs in areas like retailing and the restaurant industry. That will help us here in San Diego. PENNER: John, how important is consumer confidence to our overall economic health? JOHN WARREN (San Diego Voice & Viewpoint): Well consumer confidence is a driving factor because without it people are not spending. They’re not going in to the marketplace. And if they’re not spending then suppliers have no need for new supplies. They have no need to rehire people who have been laid off. And so it’s a ripple effect. I think it’s a very important element that he mentions here. We don’t see consumer confidence rising right now. People are still uncertain because of the recession. Because they’re anticipating this next phase. The stimulus has not done what it was hoped it would do. And we’re looking at San Diego – he’s saying we should be encouraged because we see some moderate increase, building permits, more advertising for jobs, unemployment down at least a little in term of San Diego County, and so maybe those things are the things he sees as stimulating the confidence, which we don’t have right now. PENNER: What do you think of Alan Gin’s assessment of what might be called the double-dip recession happening in San Diego. You heard what John said. RICKY YOUNG (San Diego Union-Tribune): You know, he’s an economist and knows a lot about these things so I’m glad to hear him have a sort of hopeful notion for San Diego. I do know there’ve been a lot of sustained good news on the housing front – at least if you consider it good news to have housing values going up. There are good signs and I’m hopeful they’ll be sustained. A lot of it does feel a little lurching. You know, good news this week, bad news the next week. The stock market obviously not having a big boost this week. But then there’s good news and hopefully that’ll be sustained somehow. PENNER: So there we have a slight optimistic note from Ricky Young. YOUNG: I’m doing what I can for the consumer confidence. PENNER: John what are some of the indicators that we should still be concerned about? I’m going to take the other side of it. WARREN: I think we still have to be concerned about unemployment, because that is a major factor. In San Diego County we still have a large contingency of homeless people. And locally we have mayor now talking about possible taxes. We had a study come out from the county grand jury recently that talked about the need to restructure our financing here. All of these things come into play. And it’s not just a beachfront community. So, while it looks good on the one end, we have a lot of people out there that are hurting, that are without jobs. Our schools are now being impacted. Greater cuts expected – 12 – K teacher layoffs. So it’s kind of hard to be continuously upbeat when you see these things that are about to become realities. PENNER: And yet the local economy might be stimulated by some government projects. The San Diego City Council is talking about a new city hall. A downtown library has already been approved and there’s going to be ground breaking. YOUNG: Right, there’s always room for surprises. And this week the city actually moved forward with this $185 million downtown library. And one of their big issues is that it would create jobs. There’s been a lot of rhetoric at City Hall in the time I’ve been here about you know we’re in something like a depression and during the depression there were a lot of big public works projects. And so now they’re moving forward with a library and pretty soon we’ll know whether they’re going to move forward with a new city hall, which might be a little less popular an idea with the public but you know, that could create some jobs. As John notes there’s also talk of a tax increase, a sales tax increase. And that can have a depressive effect on the economy. But at the same time, it’s designed, I think, to be part of a package that would deal with the city’s ongoing structural deficit where they simply have less revenue then they have expenses. If they fix that then presumably then that could have some impact on improving the city. PENNER: Well, I’d love to have you respond John but our time is up. There are jobs and then there are jobs. We’ll talk about it next time around. Thank you very much. Ricky Young, John Warren.