The Granada Theatre was packed Wednesday morning as the UC Santa Barbara Economic Forecast Project held its annual South Santa Barbara County Economic Summit, providing details on the outlook of the economy locally and across the country.

Presenters during Wednesday’s program included Christopher Waller, Federal Reserve Board of Governors member, with a look at the Federal Reserve’s perspective on the economy; Ted Egan, chief economist for the city and county of San Francisco, speaking on a “cautionary tale for California cities,” based on San Francisco’s economy following the pandemic; and UCSB Economic Forecast Project Director Peter Rupert, providing an economic update.

According to Waller, the latest consumer price index — a measure of inflation — showed that inflation fell very slightly from 4.98% in March to 4.93% in April.

He said that some of his specific concerns include the prices of core goods, rent increases and how wages are growing.

“First, core goods prices — which were among the biggest factors that grow the escalation in inflation in the past two years — aren’t slowing down or retreating as fast as we expected in order to get inflation down to our 2% target,” Waller said. “As I think of the service category of inflation, I looked at how wages are growing. … Though some measures of wage increases have begun to slow, I am concerned that inflation won’t be coming down very much unless average hourly earnings decelerate from the most recent level of 4.4% for a pace a lot closer to 3%.”

Waller added that there has been a lot of discussion around how recent banking stresses may tighten credit conditions, and that there is a high level of uncertainty on how credit conditions are evolving.

“As of today, it isn’t clear to me what the effect from this credit tightening will be,” Waller said. “Fighting inflation continues to be my priority. … While we are seeing some tentative signs in cooling in the labor market, I am internally continuing to use our policy tools as needed to appropriately bring inflation down to our 2% target.”

Egan spoke on how the COVID-19 pandemic affected San Francisco’s economy, such as how the city’s gross domestic product — a measure of the monetary value of final goods and services — continued to grow during the pandemic, but there was a significant loss in population.

He said that while many people expect this to be because of those in the tech industry moving since they can work remotely, there was no mass exodus of tech workers.

As office vacancies rise or offices are reconfigured to support hybrid work and the city’s economy adjusts, Egan said this could cause some economic problems for downtown businesses, transit, city finances, and for the housing market and construction.

Edan called this the “smooth (but not painless) adjustment scenario,” but another possible scenario he described, with an extended period of vacancy, could create more significant problems, such as a less-attractive downtown, migration of tech talent, leading to weaker competitiveness in San Francisco, and more.

Finally, Rupert gave an economic update — talking more on inflation and reassuring people that there is “about 1% chance we’re in a recession,” especially as the national unemployment rate is at the lowest it’s been in more than 50 years.

Similarly, he showed how Santa Barbara’s employment is now just about back to where it was before the pandemic.

More information on the UCSB Economic Forecast Project and its future events can be found on its website here.