The future of San Diego’s economy looks bright, but accelerating federal spending during the pandemic could come back 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 accumulated demand for spending money, and the economy is doing much better than the initial pandemic forecasts predicted.
Thornberg, who spoke at a virtual economic forum hosted by Torrey Pines Bank, said the federal economic response to the Great Recession was inadequate but the response to the pandemic was excessive. Beacon Economics research indicates that the average American received $ 3 for every $ 1 lost from stimulus programs to counter COVID-19 job closures. This means that there is still a lot of money to spend, but these expenses could be a disaster for Medicare and Social Security coverage in the future.
“Yes, some people needed the money. But, the vast majority of people who got these funds kept their jobs and saw their incomes increase, ”Thornberg said. “It’s not a stimulus. It is intergenerational aggression. Basically, we get rich by leaving our children a lot of debt. ”
Aside from future debt problems, he said all signs point to a strong economy in San Diego. He cited wage growth, rising house prices, an increase in airport trips and rising hotel occupancy rates.
“Businesses are doing well. The economy is doing well, ”Thornberg said. “The bad luck stories you see in the newspaper just don’t make sense.”
One example he gave: claims that there would be mass evictions that would hit as soon as federal programs designed to keep tenants at home ended. The jury is still out on it, but so far the San Diego County rental market has not seen a major change in prices or vacant homes, according to the latest data from real estate tracker CoStar.
Thornberg said the money invested in San Diego was another bright spot. Venture capital funding, said the San Diego Regional Economic Development Corp., allocated a record $ 3.6 billion to life sciences in the fourth quarter of 2020 and $ 2.4 billion to technology companies in the second quarter of 2021.
“2021 is on fire for money for money pouring into the San Diego economy,” he said.
Housing was a topic that came up over and over again in a question-and-answer session. In February 2020, just before the pandemic hit, Thornberg gave a similar economic lecture at the University of San Diego. At the time, he said housing would be a problem for employers trying to retain and recruit workers – and nothing had changed since then.
He dismissed the state’s recent housing measures, such as increasing grandma’s apartments and allowing lots of single-family homes to be divided, as ineffective.
Thornberg said a better solution would be to zone mixed-use commercial land to allow retail and residential businesses in the same location.
He said many of the problems San Diego businesses face are not the result of the pandemic, no matter how tempting it is to tie things to the virus. Labor shortages, which he says have been a problem for years with tighter immigration standards, lower birth rates and a substantial number of baby boomers retiring, were a concern before the pandemic.
Thornberg said it’s true that some workers haven’t returned to the workforce because they earn more on unemployment, but that’s likely a very small part of the struggle to get employees.
“By giving people unemployment, they’ve really taken the time to find the right job, a good job that offers 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 are a long-term problem, not just linked to the pandemic.
Things can change quickly, especially with newer virus variants. While California has the lowest rate of COVID-19 cases in the country, there is still fear of a new wave. Thornberg said that even with that, people have adjusted to the situation.
“We are used to this. We have mitigated. We have learned to live our lives around the COVID situation, ”he said. “My anticipation, as we move into the fourth quarter, we’ll see a big rebound in spending.”