Sticker shock for San Diegans and the rest of the country continues to worsen. The cost of food, housing, medical and child care has soared over the last year. In fact, San Diego has seen the highest price jumps in the country. Local businesses are also under pressure with tariffs.
Chris Cate, president and CEO of the San Diego Regional Chamber of Commerce, spoke to KPBS to break down what this means for local consumers and the economy.
In the last year, food has gone up 4%, housing 5%, medical care, 6.8%, childcare more than 9%. This is a strain, to say the least, on San Diegan's finances. What effect is inflation having on San Diego businesses?
Cate: They're dealing with the same impacts as everyday San Diegans. They're just trying to run a business as well too, and it's very difficult because they're experiencing those same inflationary pressures as everybody else.
So far, many businesses have absorbed the cost of President Trump's tariffs elsewhere in the country. Businesses are starting to pass those costs on to consumers. Do you expect the same locally? What are you hearing?
Cate: Absolutely. We believe that the tariffs and the cost of those tariffs are going to be passed on to consumers. I think in the short run, business owners were absorbing those costs just because of the uncertainty and what was going to happen with tariffs, whether they were going to be deferred or what, but now that we've gotten past, I think that honeymoon period, so to speak, and we're trying to realize the cost impacts of these tariffs, you're going to see those passed on to consumers. They have to go someplace.
Meanwhile, unemployment has reached 5.2% locally. If trends continue on inflation, tariffs, and unemployment, what's your prediction for the San Diego economy?
Cate: I'm not an economist, but I think you can see continued increases in inflation, you can see rising unemployment, you can see business owners begin to make the very difficult decisions to shut down their businesses or relocate elsewhere. All of the economic uncertainties definitely play a detrimental role in our local economy and local business owners in San Diego are gonna have to adjust to that.
What effect have the ICE raids locally had on businesses and labor?
Cate: I think, and I don't have scientific data to back up, it's more anecdotal in nature, but I think that you see a lot of business owners and employees who are not engaging and choosing that level of certainty for our business owners. They understand how they are able to proceed and not have again these actions coming before them and not knowing what's gonna happen or what they believe is gonna negatively impact their businesses and their employees as well too.
I didn't understand—you said it's reduced the level of engagement?
Cate: I think you have folks who are investing in their businesses or employees who are coming to work who feel a level of certainty and are safe going to work.
When you don't have that level of trust, or you introduce that level of risk or possibility for a business owner, you're gonna kind of revert back. You're not gonna be as, I think, wanting to invest or wanting to be engaged in the community, things of that sort.
So, but are you saying that employees are just not showing up to work?
Cate: Yeah, that's something that we're hearing as well too, absolutely, and that's a negative impact on our business owners.
Finally, the San Diego Regional Chamber of Commerce in July expressed its concern with the U.S. Ambassador to Mexico about tariffs on Mexican goods. Describe the impact first of those tariffs on the cross-border economy, and did the chamber's expression of concern move the needle on those tariffs?
Cate: We hope so. I think what we have been trying to educate business owners, the general public writ large in San Diego is the fact that when you look at imports from Mexico, 40% of those imports originate from the U.S. You have products that cross the border five or six times before a finished product is actually sold to consumers here, on the U.S. side, and so it's not as easy as just passing off a tariff or a cost and that's it.
The origination issue is a large one, and we have such a large presence here in San Diego and across the border with a whole range of products, from automobiles to medical devices. This level of uncertainty and these cost impacts have huge impacts to our region here in San Diego, and we're talking about tens of billions of dollars, thousands of jobs that are relying upon the binational cooperation that we have with Mexico.
