Economic Outlook 2016

National TrendsFocus on San Diego

32nd Annual San Diego Economic Roundtable

January 14, 2016

Marney Cox, Dir. Capital ProjectsSan Diego Association of Governments

2015…What Happened?• Expected• New, Improved GDP Growth• Labor Market Tightening• Fed Raise Interest Rates 

• Unexpected Surprises• Same Old GDP Growth  • Falling oil prices/interest rates/inflation• Currency Devaluations

• Emerging Trends• US Economy‐Tallest Pigmy• Stronger Dollar/ Global Weakness• Commodity Price Deflation• Range Bound Interest Rates

US Economy…Three Positive Trends

US Annual Job Change Monthly Retail Sales M$

Personal Savings Rate

2000…………….2015 2000…………….2015 2000…………….2015

US Economy…Three Lingering Challenges…Slow Growth ‐ Distressed Workers ‐ Stagnate Wages

• 1Potential GDP

Trillion$ Gap

Actual GDP

GDP Gap

2000 2014 2007 2014

Distressed Workers (000)

U

LT-U

PT-E

D 97

98

99

100

101

102

103

104

105

106

107

25% 75% median

Real Weekly WagesIndex 2004=100

2004 2014

2016 Outlook for San Diego

SD Job Growth and Hourly Earnings

‐6.0%

‐4.0%

‐2.0%

0.0%

2.0%

4.0%

‐80,000

‐60,000

‐40,000

‐20,000

0

20,000

40,000

60,000

2007 2009 2011 2013 2015

JOBS

Annual Jobs Change

SD Annual Emp Change

SD Emp pct cng

US Emp pct cng

100

110

120

130

140

150

2002 2004 2006 2008 2010 2012 2014

SD Hourly Earnings Change (Index 2002=100)

10th percentile Median 90th

SD Leading the US

Payroll Job Growth (12/07=100) Unemployment Rate (SAAR)

2002 2015 2005 2015

U.S. U.S.

SD Not All Industries Have Fully Recovered  81,900 Net Job Increase Dec 07‐Nov 15

‐20 ‐10 0 10 20 30 40 50 60

ConstructionManufacturing

Trade, Trans & UtilInformation

Financial ActivitiesProf & Bus Services

Educational & Health ServicesLeisure & Hospitality

Other ServicesGovernment

Thousands of Jobs

9

SD Created 6 More Low than High Paying Private Sector Jobs

Unbalanced Job Growth Affects Distribution of Wages

1990-2011 Growth

Compensation Category / Median Wage ($2011)

Average Salary

Increase($2011)

Real Salary Growth ’90-’11

Job Growth1990-2011

Highest Paying Jobs (Top 1/3) / $83,000 $23,000 38.0% 34,200

Mid Level Paying Jobs(Middle 1/3) / $48,200 $5,400 13.0% 85,500

Low Level Paying Jobs(Lowest 1/3) / $25,500 $3,200 14.0% 222,500

SD Housing Permits & PricesHousing Permits  C‐S Home Price Index

(2000=100)

2000 2015

$538K

0.00

50.00

100.00

150.00

200.00

250.00

300.00

Inde

x 2000

 = 100

$536K

$460K

2000 2015

0

2000

4000

6000

8000

10000

12000

14000

16000

18000

20000

2000 2003 2006 2009 2012 2015

Perm

its

Single Family Permits Multi‐Family Permits

NOV 15

CA Housing Supply DemandSupply Not Keeping Pace With Demand

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

Share of Housing PermitsShare of Population

Less Affordable Median Income/Price

SD Total Taxable Sales

Annual B$ Annual Percent Change

$0

$10

$20

$30

$40

$50

$60

2000 2003 2006 2009 2012 2015

Billion

s

SD Region Taxable Sales

‐10.0%

‐5.0%

0.0%

5.0%

10.0%

2000 2003 2006 2009 2012 2015

SD Venture Capital FundsResources for High Tech Jobs, M$ per Year & % of Total

0%

1%

2%

3%

4%

5%

6%

7%

$0

$500

$1,000

$1,500

$2,000

$2,500

1998 2002 2006 2010 2014

SD Annual VC Funds (Ave. $1.1B)SD VC as percent of total

1H15

(AVE. 3.4%)

SD Trade with Mexico Thru Otay Mesa($35B in 2013; 6% CAGR)

$0

$5

$10

$15

$20

$25

$30

$35

$40

1998 2000 2002 2004 2006 2008 2010 2012

Billion

s $

exports imports

SD Forecast 2016Indicator 2013 2014 2015 2016

Total PopulationGrowth (%)

3,154,5740.7

3,192,4571.2

3,227,4961.1

3,268,5001.3

Unemployment Rate( Dec. %) 6.8 5.5 5.1 4.8

Payroll Employment (Dec. yoy)Growth (% yoy)Jobs

1,347,4002.6

34,700

1,378,4002.3

31,000

1,416,2002.7

37,800

1,451,2002.5

35,000

Median Home Price(Aug) Growth (%)

$412,00013.4

$434,0005.5

$459,0005.8

$481,0005.0

Residential Permits  8,264 6,874 8,500 9,000

Single Family Permits(% SF)

2,56431

2,48636

2,97535

3,15035

Multi‐Family Permits(% MF)

5,70069

4,38864

6,15065

7,35065

Taxable Sales ($ Millions)Growth (%)

$49,4444.3

$51,1003.3

$52,9003.5

$54,7003.5

Economic Outlook 2016

National TrendsFocus on San Diego

32nd Annual San Diego Economic Roundtable

January 14, 2016

Marney Cox, Dir. Capital ProjectsSan Diego Association of Governments