Is San Diego's Economy Recovering Or Not?
ALISON ST. JOHN: San Diegans' incomes have crept up a tiny fraction since last year, but local home prices (a key indicator of our economic well being) have fallen against last year's prices for a couple of months in a row. People aren't talking much about a double dip recession, but Federal Reserve Chairman Ben Bernanke, at his first press conference ever yesterday, said unemployment is still too high and won't improve much any time soon. What does it all mean for San Diegans?
Dean Calbreath, business columnist, San Diego Union Tribune
Jay Paris, sports columnist, North County Times
Mark Sauer, senior editor, KPBS News
This is a rush transcript created by a contractor for KPBS to improve accessibility for the deaf and hard-of-hearing. Please refer to the media file as the formal record of this interview. Opinions expressed by guests during interviews reflect the guest’s individual views and do not necessarily represent those of KPBS staff, members or its sponsors.
ST. JOHN: San Diego's income's crept up a tiny fraction since last year, but the home prices which are a key indicator of our economic well being have fallen against last year's crisis for a couple of months in a row so much dean, what's the prognosis? Fill us in on the figures about incomes.
LEF1: Well, in terms of employment and income, actually, especially employment growth, if we were in a normal economy, we'd actually be doing pretty well these days. We added our employment is up 1.9 percent over last year, which is twice the population growth. But the thing is that we're coming out of, like, one of the deepest economic holes ever. And as a result, even if you're doing these great things, even if car sales wept up 19 percent, an incredible number, even if car sales went up 19 percent, they're coming out of the worst year since 1975. So we have a long way to go up. And that's one thing that's affecting these home sales. Yeah, people are making incrementally more. People are a little bit more employed. But we've still got a huge unemployment problem happening, our unemployment is still averaging over ten percent.
ST. JOHN: How did San Diego's economic compare with other big cities.
CALBREATH: San Diego, I think is crawling back person most cities, but it's about in the middle range, I believe. It is crawling back a lot bit. But we have a long way to go. Especially to keep up with inflation.
ST. JOHN: So last time we talked about home prices, they were sort of stabilized, and people were wondering, is this the end of the problem, are we going into a double dip, and now they're falling again. What does that mean.
CALBREATH: I think it's quite possible that we are going into a double dip. And one of the things to watch out for is if we're going to go into a double dip with employment as well. The private sector is employing people a lot better. The public sector is laying off people, the public sector is cutting off a lot of government contractors, which are gonna result in private sector layoffs of so we have to -- there are sharks in the water that could create a double dip.
ST. JOHN: So mark, I mean, do you think this city has got enough good jobs in the making to get those incomes back up? There's all kinds of discussion about the jobs that are being created here in San Diego. Do you have concerns about what our political leaders are doing to create jobs in this region.
SAUER: Well, I think we're certainly more diversified than we were several decades ago when we were so tied to military spending out of California. That's helped us here, compared with places like Michigan and Ohio and the midwest where they have such difficulty being tied to the auto manufacturing and the terrible blows and the bailouts that were necessary to rescue those industries. As dean says, they are coming back. Ford is showing stellar profits, if you look at a percentage basis, but they're coming from, as he said, from such a deep hole. Now, here in San Diego, we've seen some layoffs at NASCAR recently, and this federal money, and the stimulus money plays out, and the appetite in Washington now seems to be simply for cutting cutting cutting, not a PhD. In it, but I took enough in college to know that by that theory, we're going exactly the wrong way. The federal stimulus spigot there has to step into this void, and apparently it's not going to. So in terms of San Diego, and jobs here, yeah, a double dip is frightening, and something a lot of economists are talking about right now.
ST. JOHN: And jay, when you look at home prices, I don't know if you've got family, but do you worry about the next generation even being able to afford to live in San Diego.
PARIS: Yeah, I've got two young sons, and they're not quite at the home buying age yet.
ST. JOHN: Some time in the future, yeah.
PARIS: Looking into that future in a crystal ball, it is a concern. Because I might be had sharing the same plight as these guys. But I don't know if I could afford to buy the home I'm in now. I look at them, and I still think that the whole home market has to shake out the stress properties issue the foreclosures, I think the banks backed off the peddle a little bit on that, and I think there's still another wave or two of that coming, and it never helps prices.
SAUER: There's still a huge percentage, is there not, of distressed sales? I think this figure is up recently. And report we still up over half of the sales in the recent quarter?
CALBREATH: We have been under half, I think it's gone under half recently. But number one, there are a lot of distressed sales, number two, there are a number of sales that should be distressed will but the banks aren't putting onto the market right now because they don't want to over load the market with foreclosures of they're taking, as you were saying issue they're taking a bit of time before foreclosing on a property just so that there won't be this huge market of foreclosures to sop up.
SAUER: So again, is that sometimes that's coming ahead now? We can see more foreclosures as that works through. It reminds me of the old line about Nova cane. It doesn't kill pain, it just postpones it. Are we gone see some more pain after the banks come back from those foreclosures?
ST. JOHN: We'll come back to that question right after the break. We have to go an check in with the membership campaign, but also remember you can join the program, maybe you're having some personal experiences about the economy. Let us know, is your income going up or down? 1-888-895-5727 is number to call to join us of here at the Editors Roundtable.
ST. JOHN: And you're back at the Editors Roundtable here on KPBS. I'm Alison St. John and our editors today are jay Paris, sports columnist of the North County times, Dean Calbreath, business columnist for the San Diego Union Tribune, and Mark Sauer, senior editor here at KPBS. We're talking about the economy, and we'd love to hear from you. Have you recently gotten a job by chance or bought a house? What was your experience? What do you feel is the prognosis for San Diego's economy? Do you feel like we're heading for a double dip or do you feel like perhaps we're pulling out of the worst here? Now, mark, you had a question about the house prices, and whether we're waiting for the banks to get rid of all their excess inventory for those foreclosures finish, right?
SAUER: Right, if we're in a limbo period here, and they're backing off a lot bit on the foreclosures, does that mean we can expect in some few months here that the distress the market will take another turn for the worst?
ST. JOHN: Dean?
CALBREATH: I think that the distressed market will go up somewhat. The banks have been going relatively slow, you know, a measured space, because they don't want this flood of foreclosures on the market. On the other hand, the government is saying but you've been foreclosing on some people you shouldn't have been foreclosing on. You know, and there have been another of lawsuits that make that point. And so that's another reason that they have been going slow. As they solve their problems with the government, I imagine that the pace of foreclosures will pick up. So some time later in this year, we might see a rise in foreclosures once their government relations are settled.
ST. JOHN: But I guess my question, dean, is if this city is not generating enough jobs that have good salaries.
ST. JOHN: Have tourism as our main source of income for a lot of people, doesn't it suggest that there might be some problems in getting back to those high house prices in the future?
CALBREATH: Absolutely. And you know, there are some good things to come out of the softness in prices. One of the reasons that businesses don't locate here, everyone says oh, we've got a terrible business climate, and too many tax, too many regulations. The number one reason businesses don't locate here is the high cost of living, including the high cost of housing. So the fact that home prices are soft, actually helps a lot of people. That having been said, you know, yeah, our salaries have long been out of step with our home prices. You know, our concentration on the visitor industry, on low paying jobs and hotels and restaurants and amusement parks, you know, that has not helped stabilize our economy.
ST. JOHN: And mark, I know we've got the Lt. Governor off in Texas, and saying that Texas has got a lot better environment for business. Do you feel like it's time for California to change some of its business friendly or not so business friendly kinds of policies?
SAUER: Well, I -- you know, a lot of people bore into this topic on a lot of sides, and some myths are created from people who may have a stake in it. I read something recently where we're kind of in the middle of thing pack. We're not as business unfriendly as a lot of people would have us believe. I lived in Texas. We had no state income tax when I worked at a newspaper in Houston. However, there is bad enough or worse than California now, in terms of the budget problems or the woes that we've been struggling with here. So that hasn't been a great panacea there either, on the -- as we're talking about the how doing prices and all, does the rental market tend to track the housing market? In other words is it a little cheaper now you for -- to rent than it was with housing prices going down also?
CALBREATH: I think the rental prices have pretty much remained stable or even gone up a little bit. Because you have a lot of people who can no longer afford houses going into rentals instead. So that has propped up the rental market.
ST. JOHN: One of the things that surprised me about the statistics, as you say, San Diego is sort of middle of the pack in terms of income and home prices. Washington DC was one of the few places in the country where home prices did go up. And San Diego has more people paid by the federal government, I believe, than any other part of the country than Washington DC. And yet our house prices didn't go up. They went down. I mean, that seemed a bit of a disappointment.
CALBREATH: Although a lot of those people who are paid by the federal government here live on military basis.
CALBREATH: And that isn't taken into account when we do our home prices.
SAUER: Those wages are, as you well know, Allison, as many stories as you do in the community.
ST. JOHN: Hard to survive on some of these basis.
SAUER: Absolutely. A lot of those folks are at the food banks, and the toy drives at Christmas time, etc. Although we do have a lot on the payroll, as you mentioned with the service industry, and the tourism, all those payrolls are not great
ST. JOHN: But there is the defense industry, which have got a lot better salaries, and I guess one question is, if there are some cuts coming down the line in the military budget, how worried should San Diego about whether some of these better jobs might be affected?
CALBREATH: Well, as mark was mentioning, we have come cuts in nasco already, there are cuts in other areas. The plus about San Diego in terms of the money from the federal government is that the feds have really located a lot of the base of money here and in Norfolk Virginia, and around Washington DC. So this is one of the three areas that's probably saver than most other areas. That having been said, there are a lot of -- if we resolve the problems in Iraq and Afghanistan any time soon, there are a lot of things that could be cut back here. We produce a lot of the unmanned drones that are being used in the Middle East now.
ST. JOHN: Do you think that as mark was saying, you know, the economy has diversified enough that if there is a big cutback in that, last week we had the editor from the Union Tribune, the military editor, Dan waters I believe -- or Jim waters.
ST. JOHN: Who was saying there really isn't enough segment of that economy to step into that void.
CALBREATH: Not for the amount os employees that are in the federal governments and not for the kind of high-tech -- the steady, high-tech pay from the government. That having been said, we do have the makings of a good biotech community, we do have the making -- we do have the remnants of a wireless community, even though a lot of that has been outsourced to Mexico and China. But yeah, it would hurts if the feds cut back. It would not hurt us as much as we were hurt in the 1990s, when it really did throw us into a very serious recession.
ST. JOHN: So we just have a few seconds left, dean, and I just wanted you to give us one every view of where you think the San Diego economy is headed. Are we literally on the brink of something? Does it look hopeful? Should we be worried?
CALBREATH: I think that this is reason for some very, very very cautious optimism. I think that things are moving up. Buff I think that there are these sharks in the water, again, especially in terms of what's gonna happen if the government cuts back on employees, cuts back on these contracts that we've been talking about. And that can really have a negative effect on our economy.
ST. JOHN: Okay. Gotta take at a break. But coming back, in the next segment, we'll be talking about sports and the Padres with Jay Paris.