Roaring Growth
Wells Fargo economists were prepared for some impressive findings when they set out to estimate the future economic health of Southern California. But what they discovered amazed even Joseph Wahed, the bank’s senior economist who wrote the just-published report on the regional economy through the first decade of the new century. The growth potential still is tremendous, he said. But so is the likelihood of ever-escalating problems like traffic congestion and air pollution.
By the year 2010 the gross regional product of Southern California will more than double, to $778 billion, for a total larger than any other state including New York. Population of the 10-county region will grow from 17 million to 24.7 million, the Wells Fargo report estimates. There will be 7 million new jobs. And while the growth rate will be slightly lower than it has been during the past decade, it should be far more vigorous than that of the United States as a whole.
But the region faces serious problems that must be dealt with if Southern California is to reach its potential and remain a desirable place in which to work and live, the Wells Fargo officials noted. There are no real surprises on the list, for the problems are the obvious ones: traffic congestion, air pollution and lagging construction of schools, water systems and sewage-treatment facilities. The report blames the situation on past inaction, cuts in federal aid and restrictions imposed by ballot initiatives limiting state and local government ability to raise funds for public facilities. The cost of these public needs for the period ending in 2010 is estimated to be $100 billion to $150 billion.
The report also says that the slow-growth movement is a temporary stopgap that threatensthe economic vitality of the region by exacerbating regional problems. For instance, restrictions on housing development in the coastal region drive up home prices, thus forcing more residents to inland areas like Riverside and San Bernardino counties to find houses that they can afford. Increasing numbers of commuters from the Inland Empire are going to work in Los Angeles and Orange counties, thus generating more traffic congestion and air pollution. Soaring housing costs also make it difficult for some areas to attract an adequate labor supply, the report said.
The Wells Fargo findings make it clear that nothing will stop Southern California from realizing a remarkable rate of economic growth during the next 20 years. They also make it clear that the region will not achieve its potential without developing regional solutions to problems like transportation and air pollution.
In Orange County last week, county and local officials complained that the new regional air plan proposed by the South Coast Air Quality Management District was impractical and would harm Orange County’s economy. The Wells Fargo report, however, indicates just the opposite: The economy will suffer unless real progress is made against smog and traffic congestion. Orange County officials also challenged the validity of the high population projections on which the air-quality plan was based. But the Wells Fargo report indicates that, if anything, the region’s population growth will be even greater.
The message is clear: Growth will come. The only way to absorb it without creating chaos and environmental gridlock is with strong, forward-looking regional planning and management.
