Forecasters see slow recovery, shift in jobs

Region-wide unemployment is expected to fall to about 7 percent over the next two to three years, the group said in its annual forecast, delivered May 5 in Santa Barbara.
While all signs point to growth — businesses, banks and consumers are sitting on cash and interest rates are low — it’s not that simple.

“If I put all that together, you’d say, this is a really good time to invest,” said Peter Rupert, the director of the Economic Forecast Project.

Why, then, the weak recovery? “Uncertainty,” Rupert said. Consumers and businesses are living more austerely, working with what they already have. Few companies want to be the first to start hiring again or investing in new capital, he said, and many of those businesses that are ready to grow have retained earnings that they can dip into before walking into a bank.

The downturn hit some industries harder, causing the compositional change in the region’s job makeup to vary county-to-county.

In Santa Barbara County, the financial sector was hit harder than it was in the rest of the region, with employment in the sector dipping 8 percent lower than the state-wide average. Employment in Santa Barbara County’s manufacturing sector is about 20 percent lower than its pre-recession level, and forecasters predict a further decline over the next three years.

San Luis Obispo and Ventura counties’ manufacturing sectors are expected to recover just fine, reaching pre-recession job levels by 2013.

Region-wide, construction took a very heavy blow, with the sector’s workforce down 40 percent since the previous peak. “We see nothing in the numbers to make us think it’s coming back,” Rupert said.
Ventura County’s hospitality sector suffered during the downturn with tourism-related jobs 10 percent lower than they were in 2007. Santa Barbara County’s hospitality industry dipped 6 percent over the past few years. While both SLO and Santa Barbara counties’ tourism industries are expected to make a full recovery over the next few years, Ventura County’s leisure business may remain in a longer slump, forecasters said.

The tri-county housing market is “not out of the woods yet,” UCSB said in its forecast book, although home values did show some signs of bottoming out in 2010.

Ventura County saw a 4.5 percent uptick in home prices last year, San Luis Obispo County experienced a 1.6 percent dip, and Santa Barbara County was split. Home prices in Northern Santa Barbara County dropped 0.7 percent last year, while home values on the South Coast jumped 0.7 percent.