Economist: There’s no pandemic crisis with San Diego economy

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The future of the San Diego economy looks bright, but accelerated federal spending during the pandemic could return to bite future generations, an economist said at a forum in San Diego on Wednesday.

Chris Thornberg, economist and founding partner of Beacon Economics, said there is a lot of demand to spend and the economy is doing much better than early pandemic forecasts had predicted.

Thornberg, who spoke at a Torrey Pines Bank virtual business forum, said the federal economic response to the Great Recession was inadequate but the response to the pandemic was exaggerated. According to a study by Beacon Economics, the average American was paid $ 3 for every $ 1 lost to stimulus programs to help prevent COVID-19 job closings. That means there is still a lot of money to be spent, but that spending could spell disaster for Medicare and Social Security coverage in the future.

“Yes, some people needed the money. But the vast majority of people who received these funds kept their jobs and increased their incomes, ”said Thornberg. “That is not an incentive. It’s a cross-generational raid. We basically enrich ourselves by leaving our children with a lot of debts. ”

Aside from future debt problems, he said all signs were pointing to a strong economy in San Diego. He mentioned wage increases, higher house prices, an increase in airport trips and rising occupancy rates in hotels.

“The companies are doing well. The economy is doing well, ”said Thornberg. “The stories of doom and gloom that you see in the papers just don’t make sense.”

He gave one example: There would be mass evictions that would hit once the federal programs to keep tenants at home ended. The jury has yet to agree, but according to the latest data from real estate tracker CoStar, the rental market in San Diego County has not seen any major price or vacancy shifts.

Thornberg said investment funds flowing into San Diego are another bright spot. According to the San Diego Regional Economic Development Corp. $ 3.6 billion went to life sciences in the fourth quarter of 2020 and $ 2.4 billion to technology companies in the second quarter of 2021.

“2021 is burning for money for money pouring into the San Diego economy,” he said.

Housing was a topic that kept coming up in a question-and-answer session. In February 2020, shortly before the outbreak of the pandemic, Thornberg gave a similar business lecture at the University of San Diego. At the time, he said housing is a problem for employers trying to retain and recruit employees – and nothing has changed since then.

He rejected the state’s recent housing construction measures, such as adding storeys to granny flats and dividing single-family home plots, as inefficient.

Thornberg said a better solution would be to zoning retail space as mixed use to allow retail and living in the same spot.

He said many of the problems companies face in San Diego are not due to the pandemic, no matter how tempting it is to tie things to the virus. Labor shortages, which he believes have been a problem with tightening immigration standards for years, lower birth rates and a significant number of baby boomers retiring were all concerns prior to the pandemic.

Thornberg said it was true that some workers did not return to work because they earned more from unemployment, but that is likely a very small part of the struggle for white-collar workers.

“In giving people unemployment, they really took the time to find the right job, a good job with benefits and a long-term career path,” he said. “In other words, unemployment benefits can make people say ‘I don’t want to work’ or ‘I don’t want to work here’.”

Thornberg said this means employers need to “improve their game” to make jobs more attractive to applicants, as labor shortages is a long-term problem not just related to the pandemic.

This can change quickly, especially with new virus variants. While California has the lowest COVID-19 case rate in the country, there are always fears of another spike. Thornberg said people had adapted to the situation anyway.

“We are used to it. We have tempered. We learned to live our lives in the COVID situation, ”he said. “I expect we’ll see a big spike in spending early in the fourth quarter.”

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