Californians should expect to clutch their checkbooks more tightly this year, as recent UCSB research indicates that the state is entering into an economic decline that exceeds the national average.
At a conference held downtown last week, 500 people gathered to hear researchers from the UCSB Economic Forecast Project explain a report they published last month. As a result of the state’s chronic budget crisis, researchers predict 6 percent of Californians will become unemployed compared to the national 5.1 percent average. While the U.S. will technically not experience a recession, forecasters say conditions will feel like the nation is experiencing one.
Economics Director Dan Hamilton said the project’s main finding is that California will likely suffer more than the nation at large.
“The main message is that the United States is not forecasted to go into a recession, but it will be very close,” Hamilton said. “There will be very slow growth. It will feel like a recession, but it won’t be. California is forecasted to have a mild recession. It won’t do quite as well as the nation, and it will be hit harder by the real estate market.”
In addition to providing a national and statewide economic forecast, the project publishes yearly Regional Economic Outlooks for individual counties. The Santa Barbara County Economic Outlook will be published later this month. The forecasts provide information about the local economy such as price rates, interest rates, employment levels, housing prices and many other economic factors.
According to Hamilton, the Santa Barbara area has a particularly fascinating economic dynamic.
“One interesting thing is Santa Barbara County has two very different sub-areas to it, North County – Santa Maria and Lompoc – and the South Coast – Carpinteria to Goleta,” Hamilton said. “They are pretty different in the way their economy evolves. One of the things we’re seeing is areas in the Northern County getting hit harder by the real estate slow down, [while] the South Coast is not as bad. Economic growth in the Northern County is normally faster than in the South Coast area but is now slower. The South Coast area is normally a slow growing area, but now it is growing at a respectable pace.”
Armed with the wealth of information presented in the economic forecast, researchers hope citizens and groups can make informed decisions to best avoid financial loss.
The Project’s Business Development and Marketing Director Jane Donnellan said she considers the forecast as a community service since many local businesses use the information for running their business the following year.
“It’s important to know that although [the UCSB Economic Forecast Project is] self-supporting, the business community supports us through sponsorship, and the university is behind us and considers us a community service,” Donnellan said.
Hamilton said although the economic situation may appear worrisome for some, he suggests people remain calm.
“For the next year, there is uncertainty about what’s going to happen,” Hamilton said. “However, fundamental rules of the game haven’t changed. What I would tell people is don’t get nervous. If you have a job and are working locally, don’t worry. Sit tight. Various problems in financial markets and so on will pass, and we’ll go back to something more like a normal economy.”