February 01, 2008
A "San Diego-style" recession
Alan Gin is an economics professor at the University of San Diego (a separate institution from the University of California at San Diego, where I teach). His San Diego index of leading economic indicators is sending a pretty strong negative signal.
Today's San Diego Union Tribune carries this story:
With unemployment hovering near 5 percent and home foreclosures surging, the local economy has probably dipped into "the San Diego equivalent of a recession," according to an economic index released yesterday by the Burnham-Moores Center for Real Estate at the University of San Diego.
After two years of slowing, job growth has dropped beneath the rate of population growth and unemployment has hit a four-year high, leading USD economist Alan Gin to conclude that the economy may be in a San Diego-style recession.
The San Diego Union continues:
Gin expects local companies will hire only 5,000 to 8,000 people this year, compared with 10,700 last year and 17,800 the year before.
"That's not enough jobs, given our natural population growth and aging," Gin said. "And then there's also slower economic activity, including slower home sales."
But the local economy still does not match the technical definition of a full-blown recession because there has been not been a year-to-year decline in employment or the gross regional product.
Gin predicts that conditions will not get that bad because of the county's diversified economy, strong tech sector, tourism industry and military bases. "In terms of an actual recession, I don't think that can happen," he said.
Other economists are more wary.
"I hope he's right," said James Hamilton, economist at the University of California San Diego. "But in a some ways, I think we're more vulnerable to a downturn than a lot of other regions. We had a much bigger run-up in home prices and are having a bigger fall. There's a potential for much bigger price declines, which could have a big effect on consumer confidence and spending."
If there is a national recession, it could cut into the local tourism industry because fewer people would have money for travel, Hamilton said.
Why oh why can't those economists ever agree on anything?
Posted by James Hamilton at February 1, 2008 08:36 AMdigg this | reddit
Often, a single "economist" cannot even agree with himself during a long presentation.
It is the "curse of the two hands."
Or, as Bush 41 might say, "the other hand thing."
Posted by: esb at February 1, 2008 03:57 PM
Is there any merit in that regional or metro or municipal variant of (national) recession? [How about the merit of international recession?]
Consider the fortunes of the legal profession in say San Diego should there be an "SD Style recession"?
Or due to State funding problems, also the fortunes of criminals who have become too expensive to detain any further...
But anyhow, Gin's
conditions will not get that bad because of the county's diversified economy, strong tech sector, tourism industry and military bases. "In terms of an actual recession, I don't think that can (he means "will", but he was too cheap to afford me as his editor] happen," he said.
strikes me as weak (save the military bases) if consumers don't have the urge to travel, or the urge to buy the next marginally better electronic widget.
I don't think *that can happen.
*that: JDH's fears about the possibility of a recession being less well grounded than Gin's flat out near-impossibility for those who are confusing him with God...and just need to know whether it can or can't happen.
Posted by: calmo at February 1, 2008 04:46 PM
"Why oh why can't those economists ever agree on anything?"
Posted by: General Specific at February 1, 2008 04:51 PM
I think those three items, military, tech and tourism could bring about a much more severe downturn in the not to distant future.
Posted by: Tom in AZ at February 2, 2008 08:31 AM
At the least one would expect that the way home prices are currently sinking consumer confidence and spending will be seriously dented.
Posted by: eh at February 3, 2008 04:08 PM