“There’s no such thing as a free lunch.” That was Lynn Reaser’s sound-bite-summary of her detailed assessment on the post-election national, state and local economies – and the introduction to her forecast for 2013.
Reaser is chief economist for the California State Controller’s office as well as for the Fermanian Business and Economics Institute at PLNU. Reaser and State Controller John Chiang addressed a breakfast crowd of about 350 people on Nov. 15, at PLNU’s Liberty Station Conference Center. In October, the National Association for Business Economics (NABE) honored Reaser for most accurate economic forecast.
Highlights from the presentation, “Will the Fiscal Fog Clear?” included:
- San Diego is well-positioned to survive the inevitable cuts to defense spending associated with sequestration and could actually grab a bigger share of the shrinking defense budget. This is due to our alignment with the Navy’s refocus on the Pacific and unconventional warfare like drones and cyber security.
- “Housing will stage a meaningful upswing,” where it has been “the principle scourge on San Diego’s economy” over the past several years. Sales should increase seven percent in 2013 and prices are projected to rise 5.5 percent, though that means property values will still be just two thirds of their peak value. One-third of homeowners in the county are still under water.
- San Diego County’s unemployment could fall below eight percent in 2013 for the first time in five years and the region is expected to add about 29,000 jobs.
- Technology continues to flourish in California with wireless in the forefront.
- The stock market downturn following the presidential election could just be a result of end-of-year selling. But it could also be a reaction to the uncertainty associated with the fiscal cliff as well as concerns about European and Asian economies.
- Rising wages in China have made Mexico competitive in manufacturing and reversed the assumption that our neighbor to the south would become totally supplanted by Asia.
While most indicators are pointed in the right direction, the fiscal cliff looms as a significant problem that could lop off nearly four percent from the GDP if legislators in Washington cannot find a compromise to avoid spending cuts and to extend tax cuts that are set to expire. On the state level, the economic upswing has helped the revenue side of the budget, but Sacramento still needs to find a “fiscally sound and sustainable path.” In other words, before you take a bite of that sandwich, figure out how you’re going to pay for it!
The breakfast was followed by a press conference and the public relations effort achieved significant coverage in local print, TV and radio. Of course such meaty material makes a public relations practitioner’s job easy.