Lynn Reaser, Ph.D.Chief Economist, Point Loma Nazarene University

A Look at the Economy in San Diego

IFMA San DiegoJanuary 13, 2010

U.S Outlook

2

Real GDP Growth Forecast in 2010

Percent change, Q4/Q4

“V”-shaped Recovery GDP, billions of chained 2005

dollars

Weaker-than-normal ReboundReal GDP, % change

Trough to 6 qtrs later

6

Job Growth to Slowly ResumeChange in nonfarm employment, in

thousands

Jobless Rate to Edge Lower by Year-end 2010

Percent

Actual

Profits to ReboundAfter-tax profits, percent annual changes

Inflation SubduedConsumer prices, percent change,

Q4/Q4

Interest Rates to Slowly RiseQuarter-end, percent

10-year Treasury note

U.S. Forecast Summary

• Recession over• Financial markets settle• “V” shaped recovery, but less

robust than normal• Moderate inflation• Gradual rise in interest rates

ME WORRY?

Debt Shifts to the Public Sector Q3 2009, % change from prior quarter,

annualized

13

California’s Prospects

14

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California Bottoming Out with Nation

Nonfarm employment, percent change over prior years

US

16

California Outperforms in Goods, Underperforms in Services and

Government JobsPercent change, Nov 2009 over prior year

U.S.

Goods Private Services

Gov’t

17

California’s Problems

• Dysfunctional government

• Fiscal pressures

• Infrastructure and schools

• Regulatory burden

• Expensive housing

• Water usage

18

California’s Strengths

• Entrepreneurial talent

• Technology frontrunner

• Environmental leader

• International edge

• Draw of our climate

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San Diego

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San Diego’s Jobs Decline Widespread

Percent change December 2009 over prior year Total

22

San Diego’s Jobless Rate RisesMonthly, percent

23

Home Sales and Prices Recover

Percent change, November 2009 over prior year

Prices

Sales

24

San Diego Home Price Trend Converges to the Nation’s

S&P/Case Shiller Home Price Index, Jan. 2000=100

San Diego

U. S.

San Diego Housing Permits to Rise

25

Thousands of units

Commercial Real Estate

• Distress across the board

• Gap closing between lease and

sublease rents

• Market trough end of 2010

• Owners better capitalized than in early

1990s26

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Positive Forces

• Housing market improves• International trade• Technology• Alternative energy• Naval construction• Tourism• Health care and biotech

Risks/Constraints

• Rising commercial real estate vacancies

• Credit still tight• Fiscal problems for

state and local governments

Outlook for San Diego

San Diego Jobs to Return

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Implications for Facilities Managers

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Fastest Salary Growth Expected in 2010

Takeaways for Property Managers

• Keep your tenants happy• Earn a raise in 2010• Take care of your employees• Re-examine your personal

finances• Character counts