Monday, August 20 , 2018, 2:17 am | A Few Clouds 67º



Economist Offers Rosy Outlook Despite Gloomy National Mood

At Radius Economic Forecast in Santa Barbara, Christopher Thornberg says country continues to have bright near-term economic future

Christopher Thornberg speaks during Tuesday’s Radius Real Estate and Economic Forecast in Santa Barbara. Click to view larger
Christopher Thornberg speaks during Tuesday’s Radius Real Estate and Economic Forecast in Santa Barbara.  (Sam Goldman / Noozhawk photo)

“Miserabilism” — having or promoting a miserable or overly negative view of things — was the way economist Christopher Thornberg diagnosed the country’s mood on Tuesday at the Radius Real Estate and Economic Forecast in Santa Barbara. 

Economic conditions in the United States, California and locally are overall much better than one may think, Thornberg said — if only the right issues were discussed and the right statistics examined.

Thornberg was the keynote speaker at the ninth-annual forecast, put on by Radius Commercial Real Estate & Investments at the Fess Parker, a Doubletree by Hilton Resort.

The frequent media commentator and former advisor to the state’s Controller and Treasury offices is a founding partner of Los Angeles-based research and consulting firm Beacon Economics, and an adjunct professor at UC Riverside, where he directs the university’s Center for Economic Forecasting and Development.

Nationally, he said, economic growth has slowed a little, but remains strong.

“Reality: GDP’s growing a little slower than we like, but it’s growing,” he said. “More importantly, the fundamentals are very strong right now. There’s no chance of a recession any time in the near future because the fundamentals are relatively good.”

Demand for workers is high, though it is becoming harder to find the right employee for the right opening, Thornberg told attendees, who included local business owners, elected officials, landlords and tenants.

Income inequality is not as much of a problem facing the country as many people paint it to be, Thornberg said.

The real issue is wealth inequality, which he said has been worsening nationwide for years, and is making it harder for people lower on the socioeconomic ladder to handle personal financial crises and prepare for retirement.

The decline the country has seen in labor market participation rates, Thornberg said, has been going on since around 2000 — before the Great Recession — and is symptomatic of the country’s aging population.

Baby Boomers are still the defining generation of the nation’s economy, he said, because the impending waves of retirement will place considerable strain on programs like Medicare and Social Security — setting up a fiscal crisis for the United States in the coming 20 years if not addressed.

“The silence is deafening,” Thornberg said. “Nobody is even talking about it. How pathetic is that?”

He added that the “glut” of domestic oil production is ultimately beneficial to the U.S. from both a geopolitical and an environmental standpoint, and that now is a great time to buy a home.

“Housing is more affordable now than not only what it was in 2005, it’s more affordable than it was in 1999,” he said.

The common belief that California is bad for business, Thornberg said, is “so preposterously out of tune with the data.”

To many attendees’ surprise, Thornberg explained that in a state that actually has one of the fastest growing economies in the country, the southern Central Valley is, economically, the most rapidly growing area of California, with the tech-oriented Bay Area noticeably behind several other regions of the state.

Santa Barbara, he said, is “doing OK,” while Ventura is toward the bottom.

“As hard as Sacramento’s trying, they’re yet to screw it up,” he said.

One of the morals of the story, Thornberg said, is that “bodies” are the key to long-term economic growth — and that bodies require housing.

“From here on out, if you want California to keep growing rapidly, if you want Santa Barbara and Ventura to start moving towards the top of that growth chart, you have to start with housing.”

The California Environmental Quality Act, which provides ample opportunity to contest proposed urban development, and Proposition 13, which limits property taxes in the state and thus the resulting revenue, have been key obstacles to creating more housing, he said.

Without more housing, only wealthier people will come into the state, which would further drive up the costs of existing housing, he said.

Though California’s business climate isn’t driving out business, Thornberg said, lawmakers still have room to make life for businesses easier.

Tax levels in the state aren’t onerous, he added, but the structure of the tax system puts the state at risk for a bad economic downturn.

Proposition 55, the state ballot initiative that would extend tax increases on incomes over $250,000, is a poster child for the current structure, he said.

Noozhawk staff writer Sam Goldman can be reached at .(JavaScript must be enabled to view this email address). Follow Noozhawk on Twitter: @noozhawk, @NoozhawkNews and @NoozhawkBiz. Connect with Noozhawk on Facebook.

Support Noozhawk Today

You are an important ally in our mission to deliver clear, objective, high-quality professional news reporting for Santa Barbara, Goleta and the rest of Santa Barbara County. Join the Hawks Club today to help keep Noozhawk soaring.

We offer four membership levels: $5 a month, $10 a month, $25 a month or $1 a week. Payments can be made through Stripe below, or click here for information on recurring credit-card payments and a mailing address for checks.

Thank you for your vital support.

Become a Noozhawk Supporter

First name
Last name
Enter your email
Select your membership level

Payment Information

You are purchasing:

Payment Method

Pay by Credit Card:

Mastercard, Visa, American Express, Discover
One click only, please!

Pay with Apple Pay or Google Pay:

Noozhawk partners with Stripe to provide secure invoicing and payments processing.

  • Ask
  • Vote
  • Investigate
  • Answer

Noozhawk Asks: What’s Your Question?

Welcome to Noozhawk Asks, a new feature in which you ask the questions, you help decide what Noozhawk investigates, and you work with us to find the answers.

Here’s how it works: You share your questions with us in the nearby box. In some cases, we may work with you to find the answers. In others, we may ask you to vote on your top choices to help us narrow the scope. And we’ll be regularly asking you for your feedback on a specific issue or topic.

We also expect to work together with the reader who asked the winning questions to find the answer together. Noozhawk’s objective is to come at questions from a place of curiosity and openness, and we believe a transparent collaboration is the key to achieve it.

The results of our investigation will be published here in this Noozhawk Asks section. Once or twice a month, we plan to do a review of what was asked and answered.

Thanks for asking!

Click Here to Get Started >

Reader Comments

Noozhawk is no longer accepting reader comments on our articles. Click here for the announcement. Readers are instead invited to submit letters to the editor by emailing them to [email protected]. Please provide your full name and community, as well as contact information for verification purposes only.

Daily Noozhawk

Subscribe to Noozhawk's A.M. Report, our free e-Bulletin sent out every day at 4:15 a.m. with Noozhawk's top stories, hand-picked by the editors.

Sign Up Now >

Meet Your Realtor Sponsored by Village Properties

Photo of Gary Welterlen and Carla Reeves
Gary Welterlen and Carla Reeves
"We both love this business. We strive to make life long relationships from each real estate transaction."

Full Profile >