Amidst increasingly dark predictions about the national economy, a recent diagnoses conducted by UCSB economists projects shows slow but stable growth for the local economy.
The UCSB Economic Forecast Project, established in 1981 by the Department of Economics at UC Santa Barbara to monitor and provide projections of future economic activity, released its latest predictions for the national, state and local economies earlier this month. The project’s analysis indicates a static rate of total employment growth, modest gains in overall economic productivity and a 1.5 percent growth in real gross product for the Goleta area.
The project’s executive director, professor Bill Watkins, said the consistency of local job sources is largely responsible for the resilience of the regional economy.
“The major employers here are not as susceptible to the economy. The university, the community college, government jobs and Cottage Hospital provide stable employment,” Watkins said. “UCSB and the hospital have both undergone a fair amount of construction, so regardless of the US economy, Goleta will continue to experience slow growth.”
Nationally, however, things aren’t looking so good, the report indicates.
The Project previously estimated that the U.S. economy would continue into a downturn driven by overburdened consumers and lack of credit availability. However, Watkins said recent developments like Washington’s $700 billion bailout plan and Wall Street’s recent spiral may spur even more dismal circumstances than previously anticipated.
“We were forecasting slow U.S. growth prior to the bailout,” Watkins said. “Now with the bailout there is growing concern that credit will dry up and cause the U.S. to enter into a recession.”
With the collapse of several financial giants and the Wall Street buyout package in purgatory, Watkins said the nation faces a serious loss in consumer confidence.
“Certainly if there is not a bailout the situation will be more dire than we originally predicted – and I am not even sure they could put [a bailout] together,” Watkins said.
At the state level, Watkins said projections for California mirror federal circumstances. Statistics compiled by the project show job growth at negative 0.5 percent, unemployment at 7.6 percent and real gross state product down to negative 1.1 percent.
“California is in a recession and losing jobs,” Watkins said. “We are forecasting a decline in our economy.”
Watkins said the market is also pushing residents to relocate, pointing to real estate foreclosures and a rise in defaults as evidence.
“In terms of domestic migration, people are leaving,” Watkins said. “The middle class and younger people are leaving in search of better opportunities and affordable housing, and the result is a change in our demographics … the middle class is disappearing.”