housing market

So what’s all this talk of a double-dip recession? And how does that affect San Diego County? Well, end of June projections nationwide raised fears that we would see a double-dip recession. With an increase in lay-offs, unemployment, declining home sales, a dip in the stock market, and other various factors, Nobel Prize-winning economist Paul Krugman stated that “the world might be on the verge of depression.”

However, last week’s projections lightened the mood a bit. Retail sales rose and unemployment claims declined. The stock market also rebounded, raising 5%–its biggest rebound in a year.

The San Diego Union-Tribune talked to local economist Alan Gin of the University of San Diego, asking him to give his thoughts on how San Diego County fares in the recession. He along with others are more optimistic than Krugman, but Gin does think only minimal growth will be present for some time, saying that California may possibly perform worse on a national level if state budget issues are not remedied.

Gin says that presently, things are positive for San Diego County. “The economy’s not spectacular, but it does seem that the most likely scenario is that we’ll keep chugging ahead with slow or moderate growth, gradually pulling out of the recession.”

Currently, while unemployment remains high, there are also positive trends in job growth. In fact, job growth has been on the rise for four consecutive months with 9,000 new jobs added in May. San Diego home prices are also on the rise.

Additionally, San Diego County hiring numbers were the strongest seen since May 2007, before the recession even began. Construction and manufacturing were also up.

“There are some mixed signals in the economy, which is what has been troubling people during the past couple of weeks. Although most of the negative signals are at the national level, they could carry over to San Diego.”

On a national level, unemployment is still high, home sales are declining, and job growth is relatively low. These factors contribute to consumer concerns which in turn keeps people from buying, further weighing down the economy.

Gin says, “The worst-case scenario is that San Diego County will get dragged down by the national economy. I think we have enough strength that if the national economy doesn’t go down, we’d continue to grow. But a national downturn affects the number of people who would be coming here on vacation as well as the amount of sales that San Diego-based companies do throughout the nation. Conceivably, that could lead to a downturn here.”

Realistically, Gin doesn’t think San Diego County will see a dip nationally that would be severe enough to drag San Diego into a double-dip recession.

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