San Diego will lead an economic expansion across California and the nation in 2015, says an economic forecast released Friday by Point Loma Nazarene University.
“This is an economy that I think is finally taking up some speed,” said Lynn Reaser, the chief economist at Point Loma Nazarene’s Fermanian Business and Economic Institute. “As I talk to consumers and go into restaurants and shops and businesses, there seems to be finally some more optimism. People are finally believing, ‘Yes, the recession is over,’ and it’s not just for economists, it’s for them.”
Speaking to several hundred people at the Hyatt Regency La Jolla on Friday, Reaser said she was bullish on San Diego’s economy and the job market for the upcoming year.
Reaser said San Diego’s leading edge biotech field is on fire, while other technological firms making unmanned aerial vehicles, and those in environmental science and health care continue to grow. Those, combined with large defense and tourism sectors put San Diego on a path to add 35,000 jobs, the most since 2012. That should push the unemployment rate down to 5.4 percent by the end of the year.
“San Diego looks like it’s going to outperform everybody,” Reaser said. “We’re going to outperform the state and we’re going to outperform the nation as whole.”
That’s not to say the state and the nation won’t see progress in 2015. Reaser pointed to a positive national jobs report released Friday by the U.S. Bureau of Labor Statistics, showing 321,000 people added to payrolls in November and the unemployment rate at 5.8 percent. She also noted that wages grew 2.1 percent annually, which is a reflection of a positive job market.
Overall, she expects consumers to continue spend more and save less. She said a recovery in the global economy could cause oil prices to tick up to $80 a barrel, but that low gas prices still represent a tax cut for consumers. She noted that every penny saved on gas is an extra $1 billion to spend. As a whole, she said inflation will stay around 2 percent, not too hot and not too cold.
Reaser said she expects businesses across the country to invest more in equipment and technology, and that will help push the national gross domestic product up to 3 percent.
“We’ve seen growth just at about an average of 2.3 percent,” Reaser said. “That is really sad and really anemic, and we think we’ll finally break out of that zone in 2015.”
Statewide, Reaser said California has done quite well, and expects 325,000 year-over-year job gains to be added in 2015. That would push the state’s jobless rate down to 6.5 percent, about 1 percent higher than the national average.
Reaser said she considers the biggest threat to the nation’s economy to be the Islamic State, and also urged business to invest in guarding against cyber attacks.
Point Loma Nazarene gave itself a ‘B’ grade for last year’s forecast.
The university correctly predicted that the Federal Reserve would scale back its quantitative easing, but the central bank did it sooner than expected. Inflation remained slow, at 1.7 percent, exactly what the university predicted. Point Loma Nazarene predicted California would add 265,000 payroll jobs in 2014, but the state has added 302,000 jobs. The university correctly predicted the state’s unemployment rate would drop more than a full percent.
San Diego and the nation both added more jobs than the school anticipated. Locally, employers added about 34,000 jobs this year, above the 28,000 PLNU had predicted. Nationwide, employers added 2.7 million jobs, above the 2.4 million the school anticipated.
The county’s housing market improved differently than Point Loma Nazarene forecast last year. Home price appreciation slowed from 18 percent in 2013 to 4 percent in 2014. The university estimated home prices to grow 9 percent over the year. Reaser said, however, that building activity increased more than anticipated.
This article was originally published in the San Diego Union Tribune and can be found HERE.
