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Don't say 'grim'

Reaching for optimism in the county economic forecast

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Advertising executive Maggie Cox tried hard to lay down the rules for speakers at the San Luis Obispo County Economic Outlook, where 600 business executives, politicians, and interested parties gathered to hear a forecast on the economy in the county.

PICK A DIRECTION :  Economist Bill Watkins handicapped the likelihood of these various directions for SLO County. - COURTESY OF SLO ECONOMIC FORECAST
  • COURTESY OF SLO ECONOMIC FORECAST
  • PICK A DIRECTION : Economist Bill Watkins handicapped the likelihood of these various directions for SLO County.

First among those rules: Don’t use the word “grim.” She revealed this rule just after Cal Poly President Warren Baker opened the day by invoking the word. He wouldn’t be the last.

As each speaker finished their presentations, Cox added words she wished she’d banned. Her list grew to include “bleak,” “dismal,” and “bloody parts.”

Even more dire were the images broadcast on the screen as speakers discussed the real estate economy, the budget news from Sacramento, and the impact of California’s push to turn back time on global warming emissions.

As Bill Watkins, the usually optimistic economist who heads the UC Santa Barbara Economic Forecast Project spoke, he flashed such images as a wrecked train, a crumpled pickup, and rusted-out jalopy, each selected to symbolize one aspect of the current state of the economy.

The crowd really knew things were bad when, in search of optimism, Watkins reached to those things that never change, noting the county’s pretty scenery and good weather.

“Even if you’re out of work,” he offered, “it’s better to be out of work here.”

Watkins, a former economist with the Board of Governors of the Federal Reserve, described himself as a “glass half-full guy.” At last year’s talk, despite troubling statistics, his overriding message was: “I’m here to tell you things aren’t as bad as you think they are.”

This year, he felt compelled to tell the audience that he doesn’t see a full-scale depression coming.

“People who’ve predicted the end of the world?” he said. “They’ve always been wrong.”

He stressed that forecasting during a time of collapsing banks and businesses and government bailouts isn’t easy.

Yet when it came time to cast blame, Watkins looked to the 15-year-old push to increase home ownership as a cause of the recent housing collapse, and he suggested that new proposed regulations for the banking industry won’t fix the problems.

Here are some other highlights:

He said that while SLO County was largely spared the pain of the last recession in 2000 and 2001, and has lagged behind in others, it isn’t faring so well this time.

Statewide, this recession will likely be worse than the recession of the early 1990s, with unemployment reaching 10 percent in 2009.

The economy of the City of San Luis Obispo is faring better than elsewhere in the county. Atascadero, he said, has seen retail sales fall more than 10 percent in the last year.

He said that while employment at Cal Poly, PG&E, and in the energy market, thanks to new solar plants planned, may be stable, there’s volatility in essentially every other sector, including tourism and winemaking.

How dour was his speech? Here’s how he ended: With a slide of himself, standing against a wall, blindfolded with his own tie. He intoned: “Thank you for not shooting me.”

 

INFOBOX: SLO County forecast highlights:

Jobs: 2010 will mark a third year of job losses. The unemployment rate will peak at 7 percent in 2009, its highest since 1994. That compares to 10 percent statewide.

Declining sectors: Construction, finance, professional and technical services, leisure and hospitality services, the public sector.

Unscathed sectors: Mining and quarrying, education, and healthcare.

Income: Negative growth for 2009, 2009 and 2010 Real county median incomes fell in three of last four years and trend will continue to 2013.

Population growth: Slow to .08 percent in 2008, will gradually increase from 2010 to 2013.

Sales taxes: They’ve been negative since 2007 won’t grow until 2011.

Home prices: “Full downswing” now, with falling median home prices in many communities through 2009, though overall sales will increase from rising foreclosed and distressed sales.

Building activity: Will “essentially come to a halt in 2009” with close to zero new housing permits and 45 percent decline in nonresidential building.

 


 

Managing Editor Patrick Howe can be reached at phowe@newtimesslo.com.

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