National and Local Economic Overview

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National and LocalEconomic Overview

• Alan Gin
• Associate Professor of Economics
• School of Business Administration
• University of San Diego

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National Economic Forecast

• Economy likely already in a recession
• Indications of a weak Christmas buying season
  ahead
• Negative GDP growth expected through first half
  of 2009
• GDP growth of 0.5 to 1.0 expected for 2009
• 2nd half stronger than the first
• Inflation to moderate
• Price of oil dropping
• World economic slowdown will reduce demand

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Economic Policy

• More action by Federal government is likely
• Additional support of financial and other
  organizations
• Stimulus package
• Tax relief
• Extended unemployment benefits
• Public works spending
• Relief for state and local governments
• Budget deficit, national debt to expand
• Moderating inflation gives Fed room to maneuver

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Current Situation

• San Diego likely in a recession at this point
• Weak housing market
• Foreclosures gt large inventory of home for sale
• Credit availability
• Stricter standards
• Larger down payments
• Problems with financial institutions

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Two Self-Reinforcing Cycles
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Two Self-Reinforcing Cycles
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2009 Outlook for San Diego

• Local economy to remain weak
• Job growth flat
• Unemployment to top 7
• Slow economic activity (home sales, retail sales,
  income growth)
• Housing market not likely to bottom out until
  late 2009 at the earliest
• Continued downward pressure on prices
• Foreclosures to remain at high levels
• Location, location, location