CLU/CERF: Policy, Politics and Prognostication (Part Three)

By Sheryl Hamlin

This is Part Three in a multi-part article of the CLU/CERF 2016 Ventura County Forecast meeting held on November 10, 2016 at the Serra Center in Camarillo.

In Part One, Dan Walters of the Sacramento Bee, gave the political outlook for the state as well as thoughts on a possible recession. In Part Two, Joel Fox of the Fox and Hounds political blog, drills down into California Tax issues and the current appetite for more taxation.

In Part Three, the founder and current director of CLU/CERF speaks about Ventura county economy, demographics and anomalies.

Dr. Bill Watkins, Executive Director, CLU/CERF

In 1967, Bill Watkins arrived to California in his Citroën, nearly 50 years ago. When he arrived, Ventura county’s population was 316,400 with a 9% growth rate, a median age of 25 and about $10,000 median income. The net “in” migration was 7,500 people. The county still had Matilla Lake, Sherwood Lake, Oxnard Air Force Base, large oil sector, lima beans, sugar beets and a dark, unlit Oxnard plain.

Contrast this to 2016, the population of Ventura county is about 850,000 with .7% growth, a median age of 37.5, a median income of $80,000 with a net “out” migration of 286 people. Slow growth measures win elections, mall have proliferated, Thousand Oaks was born and strawberries reign, temporarily.

The disappointing United States economic recovery continues with a GDP forecast of barely 2%, which he said, has nothing to do with either candidate, both of whom espouse policies incompatible with growth. The slow growth in non-farm jobs and the decline of real productivity (“productivity recession”) are cause for alarm.

The Trump Factor?

Trump promised 4% growth rate, which says Watkins, may be possible but not with Trump’s trade policy. Exporting workers will not help, nor will renegotiating NAFTA. Yes, there are too many regulations, but this will not be fixed overnight.

For the public to see any changes from a Trump or a Clinton, it must wait 8 to 10 years. In the mean time, there is a 50-50 forecast of a recession.

Real Estate Bubble

Home ownership rate has been dropping and now sits at around 64%. This decline is unprecendented, he says. Their models do not show where the bottom will fall. There is no pressure to increase homeownership at the present time.

An anomaly exists with the prices of homes and the affordability. In Ventura County, the affordability percent is 30% according to the NAR. This means that 30% of the residents can afford the median priced home of $600,000. Click here for state map of affordability. However, home prices are still below the peak in 2006/2007. An obvious area of research would be the home affordability percentage at the peak of the market.

Housing starts are up, but are still below the peak or pre-recession level. Home sales are only slightly moving with prices increasing and prices are still below the pre-recession peak. Fewer new homes are being built nationwide for many reasons: bank lending declining, local resistance to new developments, and increased fees on developers.

us_single_family_sales

He showed a map of California labeled the “Great Divide”. West of the San Andreas Fault is wealthy while east of the fault is poor. California leads the nation is wealth, poverty and inequality, he said.

Is Education the Answer?

California public higher education issued 2.5 million college degrees between 2005 and 2015, but only 1.136 million new jobs during the same period. Question remains about these excess degreed individuals. Have they left the state, as he surmises, for jobs elsewhere or are they underemployed? Note that these statistics do not include the vast network of private higher education in California.

California is still importing skills unique to Silicon Valley with 30% of new jobs in the leisure and hospitality sectors.

Peak People

With net migration negative from Ventura County and the population growth slow to zero, perhaps we have reached “Peak People”?

vc_non_farm_jobs

Bill did not have time to develop this topic, but the idea of “Peak People” is related to “Peak Jobs”, both of which reflect the demographics of an aging population with declining birth rates. Here is an article in TechCrunch about “Peak Jobs” which brings out the spectre of the unemployed masses breaking the notion that all able bodied people should be working.

Bold Statement on Ventura County Demographics

There is no previous example with such an abundance of wealth, yet people are leaving. Only two sectors show job growth: healthcare and leisure. The labor participation rate is declining with no predictable bottom.

vc_labor_participation_rate

Note SOAR passed in 1995. Watkins says Ventura’s slow growth is “not accidental” citing SOAR.

He predicts a new class of society, a service class, who provides everything for those who can pay, such as dog walkers. And, he said these will unlikely be highly compensated.

Ventura County will not be a economic growth machine in the near future.

Part One is HERE and Part Two is HERE

Part Four of this series will feature innovative economic ideas for Ventura County from Mathew Fienup and his team.

For more information about the author, visit sheryhamlin.com


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