S.D. Economic Forecast : A 6.7% Growth Rate to Lack Vigor of Past

A growing population and slightly increased employment opportunities, coupled with a booming tourism business and continued defense spending, will help San Diego County’s economy outperform the U.S. economy during 1988, according to an annual economic forecast by the Greater San Diego Chamber of Commerce.

San Diego’s gross regional product--the estimated value of all goods and services produced in the county--is expected to increase by 6.7% to nearly $45 billion during 1988, up from an estimated $42.1 billion in the year ending December, 1987. By comparison, the gross national product is expected to increase by just 4.9% to $4.7 trillion during 1988, the chamber said.

Despite that positive outlook, the chamber forecast cautioned that growth will not match the “vigorous expansion” enjoyed by San Diego during recent years.

The projected 6.7% increase in the gross regional product is slightly behind the 6.8% growth rate that was estimated for 1987, according to the chamber’s research bureau. And, when adjusted for inflation, “real” growth during 1988 is expected to rise by only 3.5%, compared to an estimated 3.7% in real growth for 1987.

San Diego will receive an immediate, one-time boost from the National Football League’s Super Bowl XXII game, which is expected to pump $141.2 million into the economy during the two weeks before the Jan. 31 football championship.

Slower Growth

Population growth in San Diego, which is believed to have slowed during 1987, will probably continue to be slow during 1988, according to the chamber.

An additional 50,000 people are expected to move to San Diego during 1988, compared to 55,000 in 1987. By comparison, 72,000 new residents arrived in 1986, and 82,100 moved to San Diego during 1985.

That slowdown in the population growth rate is caused by an anticipated slowdown in new employment opportunities, according to the chamber.

Employment, which has been “particularly strong . . . (in recent years) . . . is beginning to see a slowing in growth,” according to the chamber. The labor force is expected to expand by 5.9%, but employment opportunities are expected to grow at a slightly lower rate.

Consequently, the chamber is forecasting that the unemployment rate will rise to 5.5% from 4.7%. San Diego’s unemployment rate will remain below the forecasted rates for California (5.8%) and the nation (6.1%).

The service sector, which accounts for more than 25% of San Diego’s jobs, will add about 13,000 new jobs, with the majority being generated by business and health services and the tourism industry.

Trade jobs (including retail, restaurants and bars) will add an estimated 9,000 jobs.

Manufacturing, led by companies in the high-tech and export industries, will add 3,500 jobs. Shipbuilding, which has been sliding in recent years, will experience a turnaround in 1988 because of recent shipbuilding contracts, the chamber predicted.

Home-Building to Falter

If interest rates fall, the construction industry will add as many as 2,600 jobs, according to the forecast. Not surprisingly, nonresidential building is expected to boom during 1988, while residential construction will be limited by housing moratoriums.

In part because of those moratoriums, authorized housing-unit permits are expected to fall to 27,000 during 1988 from an estimated 32,000 in 1987 and 43,560 in 1986.

Population growth and moratoriums will combine to push the average price of a single-family, previously occupied home up by 9.8% to $174,000. Max Schetter, the chamber’s economic research bureau director, said the average housing price figure is arrived at through a sampling of 50 homes spread throughout San Diego County whose value is estimated annually by appraisers from banks and saving and loans.

The chamber’s Economic Research Bureau also made the following forecasts:

The average household income in San Diego is expected to rise to $43,000 during 1988, up from an estimated $41,400 in 1987.

Retail sales will increase by 7.8% to $13.7 billion. Retail sales rose by 9.1% during 1987.

Inflation, driven largely by rising housing prices, will push the Consumer Price Index up by 4.5%, compared to a 4% rise during 1987.

Economic Growth in San Diego County

Percent of Change From Prec Gross Regional Current Dollars Current Dollars Year Product (Billions) San Diego United States 1975 $11.3 -- -- 1976 $13.4 18.4 10.9 1977 $15.1 12.8 11.7 1978 $17.5 15.4 12.8 1979 $19.9 13.9 11.5 1980 $22.7 14.2 8.9 1981 $25.6 12.8 11.7 1982 $27.4 5.4 3.7 1983 $30.0 9.3 7.6 1984 $33.9 12.9 10.8 1985 $36.4 7.3 6.3 1986 $39.5 8.4 5.6 1987 42.1 6.8 5.7 (Estimate) 1988 45.0 6.7 4.9 (Forecast)

eding Year Constant Dollars Constant Dollars Year San Diego United States 1975 -- -- 1976 12.5 5.4 1977 6.6 5.5 1978 7.5 5.0 1979 4.8 2.8 1980 4.6 -0.2 1981 3.1 1.9 1982 -0.5 -2.5 1983 7.1 3.6 1984 7.8 6.8 1985 2.8 3.0 1986 5.7 2.9 1987 3.7 2.7 (Estimate) 1988 3.5 1.7 (Forecast)

Source: The Economic Research Bureau of the Greater San Diego Chamber of Commerce from information furnished in part by the UCLA forecasting model.