California can expect more slow growth through next year, but the good news is that Santa Barbara County is well-equipped for a rebound in tourism and manufacturing, according to California Lutheran University economist Bill Watkins.
Watkins shared his insights on the local and national economies with about 300 people who attended Montecito Bank &Trust’s first Business-to-Business (B2B) event Tuesday night at Fess Parker’s DoubleTree Resort.
“How many people here think the economy is going to do great in the next several quarters?” Watkins asked, and about five people raised their hands. “OK, so most of you understand what is going on here.”
He said California is looking at growth close to zero, small job losses, a decline in home prices because of high ownership rates, and unemployment around 10 percent.
On the bright side, he said, aside from boosts in tourism and manufacturing and subsequent job growth, the silver lining is in the Santa Barbara housing sector.
“Recovery is not going to be even,” Watkins said. “I would guess that outside of western North Dakota, which is probably the hottest real estate market in the United States right now, Santa Barbara will be one of the first housing sectors to recover.
“Santa Barbara never built a lot, is an extraordinarily desirable location and the market is not local. … It’s a global market. People buy here from all over.”
“The more troubling news is in the last two months there’s less phone calls, less emails about people wanting to do something … maybe due to all the news they are reading and are nervous to make long-term decisions,” he said.
For the market to turn around, Watkins recommended an increase in immigration to create demand for real estate and boost business, an easing of regulations and tax policy reform.
He added that high housing prices on the coast and high unemployment inland are driving young families away, and California needs to better accommodate young families.
“It’s hard to think of California as hell when you live in Ventura County, but if you live in Fresno or San Bernardino you’re looking at a lack of opportunity, a lack of jobs,” said Watkins, noting California’s unemployment rate of more than 12 percent and poverty rate of 16.1 percent, both significantly higher than the national averages.
Despite Watkins advising, “Now would be a good time to put on your seat belt,” Montecito Bank & Trust president and CEO Janet Garufis said she is thankful for his honest approach.
“I wanted to thank Bill for helping us face the brutal facts,” she said. “When you do, you can do something about it, and one of the things that comes out of it is innovation.”
Other B2B events are scheduled for Oct. 27 and Nov. 16. Click here to register and for more information.