By most accounts, San Diego’s economy appears robust and on the upswing. The region’s unemployment rate fell to 4.8 percent in November, the lowest it has been since 2006 when the economy last reached its apex.
“The current state of the San Diego economy is pretty good,” said Alan Gin, an associate professor of economics at University of San Diego’s School of Business. “The local economy is on a pace to add about 40,000 jobs this year, which would be the best annual job growth since 1999.”
Construction is growing at a blistering pace, with 9.4 percent growth over the prior year. San Diego has added 6,000 construction jobs in the past year.
“That's been a long time coming,” said Ryan Ratcliff, who is also an associate professor of economics at University of San Diego. “The construction industry is finally coming out of the hole a little bit. We’ve been through five- or six-year period in construction where nobody was building, so we saw a dramatic decline in construction employment in San Diego.”
But despite the good news, business owners and economists remain cautious about 2016.
The San Diego Regional Chamber of Commerce conducts a monthly index to gauge the confidence level of local business people. It fell to 16.6, down from 26 in June. That’s actually the lowest point since it was first scored in 2013. One-fifth of businesses are worried that conditions will soon worsen. The index is on a -100 to 100 scale.
“That corresponds to what my Index of Leading Economic Indicators is saying as well, as it recently had a stretch of three consecutive monthly downturn,” Gin said. “That signals that while the economy is doing well now, it may slow in 2016.”
Gin recommends business owners pay special attention to employment figures.
“When job growth is strong, that means that more people have income to spend, and that spending will boost the rest of the economy,” Gin said.
Ratcliff has seen an increase of jobs on two ends of the spectrum: low wage, low skill jobs such as those in the leisure & hospitality industry; and high wage, high skill jobs such as found in biotech and engineering.
“Job growth has been very polarized,” Ratcliff said. “There’s not a lot of growth in the middle.”
Ratcliff said to watch two early indicators to track the economy.
“Home construction and home sales are typically the first canary in the coal mine and then car purchases,” Ratcliff said.