Like in the 2015 economy tell us about what to expect in 2016. To this be the end of San Diego's Prop B. A state labor board rules against the initiative that ended most city pensions. This is K PBS midday edition. I am Maureen Cavanaugh it is Monday, January 4. Here are some San Diego's stories where following in the newsroom. Keep your high waters on. The National Weather Service says San Diego could get as much as 3 inches of rain this week. Not since December 2010 has the area seen that much rain. A transport worker training and paperwork at a social service center in San Bernardino says he was nervous to return to the building that reopened today a month after a deadly terror attack. This afternoon a memorial service for victims of the shooting will be open to county employees so they can mourn together. Listen for the latest news through the day right here on K PBS. Sex act our top story on weekend edition -- midday edition. Overall the economic news at the end of 2015 was positive. We saw unemployment rates drop and the nation sought modest economic growth. We are seeing things that make it difficult to predict what is ahead in 2016 economic picture. Joining me is Marney Cox he is chief economist at the San Diego Association of governments. Look into the show. Thank you. What were the positive headlines for the US economy last year. For the US economy one thing is job growth. Most people were expecting a little bit of slowdown and job growth that did not continue to produce over 200,000 jobs per month. That was really good. On the down side of things GDP growth. The gross domestic products continue to struggle at about 2%. Most were expecting 3+ %. That in turn help down wage growth. Because what is happening is typically even though you are adding more people to productivity and business is not earning as much produce -- profit led to low wage growth. One of the shining factors of last year was the fact that the unemployment rate continues to go down. Where is job growth the strongest? Locally. The job growth is clearly the educational healthcare sector has been the predominant growth sector for the San Diego economy. This past year business services picked up and was another good one. The visitor industry with leisure and hospitality picked up and another one that has been a little bit of a liger throughout the recovery has been construction. They added 6000 jobs this past year with a 10% growth rate. What's driving the increase in construction jobs? One of the things that is been in ported -- reported is all the construction that has been going on in downtown San Diego a recent Tribune article pointed out 63 different projects that were either under construction or in some phase of that. A lot of that runs all the way from half $1 billion court building downtown all the way to some fairly small residential units but they run the gamut from commercial to residential to public-sector downtown. There's just a lot of it. We are seeing construction throughout the county archives. There's lots of discussion today that even though we are seeing a lot of pickup and construction we are not seeing enough. People were pointing out especially on the single-family housing units that despite the pickup it is insufficient to meet the demand. You see lots of things going on at the County Board of Supervisors who are trying to assess whether or not they will allow amendments to the general plan to allow some of those developments to go through. Marney Cox, what about our biotech industries? Of the layoffs that QUALCOMM a bad indicator? Not necessarily. I would point to other things if we were going to be concerned about the broad nature of high-tech -- high-technology jobs in the San Diego region. QUALCOMM is one of those industries that has certain phases of projects that are in production all the time and as it faces out of one it might pick up in another. You'll see movements up and down in their labor forces that reflect the demand in the economy. I would point to something a little more broader than capital plan -- venture-capital firms in that sort of thing have started to decline and worse than that they are falling as a proportion as the total amount of venture capital funds that are allocated in the US. We are shrinking overall plus they are declining. That is a little bit more concern for the broad-based nature of our emerging growth industry here in San Diego. I read that some economists are talking about a deflating tech bubble in California. Is that what they are talking about? Venture-capital investments in these startups? What a lot of people are predicting is that it is time to take some of those what were venture-capital funds to the market. To see whether or not the stock market agrees with the valuations and those initial public offerings are supposed to hit the market this year. We will determine whether or not the sharing economy and other kinds of products like that actually do have the value that have been placed on them or whether it is something less than that. So back to specifically San Diego we have heard all during 2015 about the Chargers soccer whether or not they will be staying here in 2016 and beyond or not. What kind of economic impact would that have if the Chargers were to leave. Fortunately or unfortunately the Chargers staying or leaving will cause much of an impact at all. It's not to say they are not important and there are a lot of people calling but from an economic perspective most franchises are either neutral or slight drags from the economy. Whether or not the public sector is asked to contribute in a major way either to develop a new facility or secondly help maintain the facility over time. It usually is a Dragon they don't receive the text revenue back to make it all. So basically a non-effect? Yes. One of the major surprises last year is that oil prices remained so low. Can you explain that because I have been reading it over and over again with economic analysis. Why is the fact that the price per barrel is still so low is such a surprise? There are two reasons. One, we should applaud. It has to do with technology changes in the industry itself. Moving to fracking and the ability to extract oil out of what they thought were depleted oil wells. This increased the supplies. It increased from about five or so odd billion barrels per day to about 9 billion barrels. We saw a huge increase in supply. There was no cutback and international supply. All of a sudden you had lots of supply of oil typically what happens when you have too much the price declines. That's exactly what we are seeing. Most places besides the United States are in recession. The actual demand for not just oil but commodities across the border are down. They also having an impact on the price of oil as well as other things that our natural resources. Most economists expected that the oil-producing countries like Saudi Arabia to cut back and boost their price per barrel. He did not do that. Any idea why? What they did not want to do was give up market share. One of the things I think the Saudis are correct about is that this is not a short-term issue. This is a boost of supply that will be over in a short period of time but instead it will be with us for a long time. If they reduce their output they felt the US or somebody else would come in and take over the market share and continue to reduce the revenues that they received. I think they are right about that not to give up market share. Have we seen corresponding benefits to our economy since gas prices are so low. Absolutely but I would say two things. There has been a decline of the dollar plus per gallon of gas that you and I purchase. If you're a driver in a community use a five or $600 a year or so. The question is what did you do with the additional money that you are no longer spending on gas. Apparently what people did not do was go out and spend it on retail goods and get into the expenditure stream that might lift the economy. Apparently they are saving it and paying off debt. It does not do much for the economy. It helps you as a person by freeing up your debt ceiling that you were pinched up closely against but I think those two things, everybody surprise. Unwillingness on the part of the consumers to take that money from the savings from gasoline and then expended in the economy. They simply did not do that. On his first day of trading and 2016 the Dow dropped more than 400 points. The stock market was also incredibly volatile last year. Of the same factors driving these plunges? Should we see it continue? Back to your point about some things that occurred in 2015 member surprises and public impacts, I think China leads us on that. When their stock market drops dramatically. They tried to step in and drop -- stop the flow. That's not the way the capital system works. Things get overpriced and it needs to get back down to a level where it makes sense again to produce at that level and a profit can be earned. China is not truly a capitalist system yet because it does not allow the reverse. Growth is good but sometimes you overgrow and you need to make a retraction. China has not done that. It's a big surprise when they tried to step in and do that. I think we are seeing carryover this year. You mentioned the decline in the stock market again created by what happened in China. China again had another substantial drop in their stock market. Part of the got to do with their decline in the value of their currency against the US dollar. A lot of that is going on across most of the other global economies where the US dollar is very strong against most other currencies. This has led to a little bit of weeks in the United States from us being able to sell goods overseas because they are less affordable than they used to be and more imports coming into the US because they are cheaper for us. This is hurting a little bit the local economy. Not enough to drag us under. We are still growing by about 2% growth each year which is good. We are just the tallest pygmy. Everybody else is doing a little bit worse. Even though 2% is not good enough the US economy is the tallest pygmy at this point. Are you concerned that the continuing problems in global markets will continue to drag us down to? That's probably the number one issue of uncertainty and the way that is unfolding at the end of 2015 and beginning at 2016 are right at the top of the list of things that might be concerned for the ability of big economy to continue to grow. The Federal Reserve raised interest rates by a quarter of a % last month. What kind of impact you think that will have? Not much of an impact at all. First of all it was long anticipated. Much of the changes in interest rates took place before the Fed ever acted on it. I would argue that you go back to July or so in the middle of the year when they were expected to make an impact in September to see what those rate started to adjust. Increase it from .25 2.50. It's not much of an increase at all. The immediate impact will be to banks. They are able to charge their customers more interest on loans that they will make so their profits will go up a little bit. It will be a little time coming before savers see any increase in interest rates so banks are probably the immediate beneficiaries of the Federal Reserve action. Whenever anybody hears about an increase in interest rates even a tiny one the concern comes about what is this going to do if anything to mortgage rates or the housing industry? Do you see any impact on that? I see the mortgage rate increase because it is so long will be mutates. With the Federal Reserve did his force of the federal foundry which is a short-term interest rate. Usually the mortgage rate runs off the 10 year treasury which barely moved at all. I think the long-term housing mortgage market is okay in the short run. If the Federal Reserve continues to rise we might see an impact. More importantly is the auto industry. They are running at all time levels of unit production. About 17.5 million cars and trucks were sold this past year. It's a new record. The question is if that contention in when interest rates rise. The second thing in the auto industry that is also important is that the fastest important of the loans that they are making are two subprime lenders. Meaning people who are either on the market -- margin they can make the payments or they are actually making to them even though they suspect that they won't be able to keep up with those payments. Those payments are stretching out further and further. In other words it used to be a five-year now it is a six year now it is a 6+ year alone so you have to pay for the car over a much longer period of time. I would say it is the auto industry that is the one that is the most potentially impacted by a rise in short-term interest rates. They are going down the same road that the housing industry was going down a few years ago. At one time it was mortgage back securities. They have things called asset-backed securities which are called auto loans but the same format takes place where they sell the asset-backed security to the finance industry was expecting the payments to continue but if they don't then the acid -- asset-backed securities are worth as much and there's another problem created in the financial industry. Also in 2015 we heard a lot about the effort to burst minimum wages. The minimum wage in California has gone up now to $10 an hour. There's going to be a referendum on the ballot in June I believe for the city in San Diego's minimum wage to go up. The number of people employed now shouldn't there be some of the pressure on salaries and income? What you just said is consistent with what the Federal Reserve felt would happen. As the unemployment rate fell the demand in the economy for new jobs would be -- there would be less people of their available to take them. Wage rates would go up to reflects the adjustment to supply and demand. Wage rates have been relatively low. Up only 1.6%. Not a lot of purchasing power increase from which is only going up like that. Back to your point the answer is I think yes. There was expectation of growth that did not happen. There's stuff coming up on the ballot measures to force the wages up with a expected the economy to do that for them. As we close what are some of the things that you will keep your eye on. Basically you think 2016 will look a lot like 2015? Especially here in San Diego. We are running about 37,000 jobs year-over-year here in San Diego. The latest numbers are November 2015 signaling back a year. Expectations are 30+35,000 jobs over the next coming year. The unemployment rate is continuing to fall consistently with what we have seen. Not too much tightness there was a lot of people that left the labor force who are on the margin thinking about coming back in. A lot of the jobs that have produced having been really high-paying jobs that have been low-paying jobs and have been impacted by this minimum wage increases especially as they approach the $11 per hour area as opposed to the 7 1/4 which is the national level minimum wage. As they approach that there's no real truly minimum wage. Instead it is a much larger segment of our economy earns wages at that level so they will have a much larger impact. Overall I would expect our economy to do a similar 2016 to what happened in 2015. I have been speaking with the chief economist at the San Diego Association of governments, Marney Cox. Thank you so much. Thank you.
Overall the economic news at the end of 2015 was positive. The unemployment rate dropped to 4.8 percent in San Diego County, and the nation saw modest economic growth.
But experts are seeing curious things in the economy. On the first trading day of the year, global stock markets sank as worries about China's economy continue.
So how will the global economy impact San Diego? What will the county's economic picture look like in the new year?
Marney Cox, chief economist with the San Diego Association of Governments, said the good news should continue for the region. He said the local economy during 2016 is expected to outpace the national and state economies, with more than 30,000 new jobs — equal to a 2 percent growth rate. Most of that growth is expected in the education and health services, business services, leisure and hospitality, and construction sectors.
Cox also said San Diego County will likely have an unemployment rate of around 4.5 percent.
But he warned the nation's GDP growth will remain sluggish in 2016, as will wage growth. That could contribute to more economic inequality across the country.