Experts Predict Even Better Economy in ’98
As good as Ventura County’s economy was in 1997, it should be even better this year, local business leaders said in a survey released Wednesday.
The results portray an increasingly diverse economy boasting steady, broad-based growth, according to officials with City National Bank, which organizes the annual survey.
Indeed, the “cautious optimism” of the 1996 survey and “decidedly upbeat” viewpoint of last year’s version have been replaced by what is described as the county’s best economic report card this decade.
The survey’s conclusions--culled from responses of more than 800 local companies--were presented to about 80 business leaders Wednesday at a breakfast meeting at Camarillo’s Spanish Hills Golf and Country Club.
“Hardly anybody is predicting a decrease in sales,” City National Vice President Brian Saline told the audience. “Human resources is the biggest concern that you have--trying to find qualified people.”
The increased profits and sales most companies experienced in 1997 are projected to grow even more this year, with 71% of respondents projecting higher sales and 55% anticipating better profit margins.
Mark Schniepp, a UC Santa Barbara economist, was also preaching a message of robust growth.
“Everything is rising in a very healthy and, to a large extent, modest fashion,” he said in an interview Wednesday. “There’s no fundamental reason why things won’t continue for the rest of 1998 the same way.”
The annual Ventura County Economic Survey and Forecast--touted as the most comprehensive barometer of the sentiments of the county business community--prides itself on accuracy. Last year, 58% of the businesses responding to the survey predicted higher sales, and 62% of participants in this year’s 10th survey reported achieving that objective.
A total of 842 companies--almost two-thirds of them with fewer than 10 employees--replied to the survey, among about 20,000 businesses polled.
While the survey showed that higher sales do not necessarily lead to a commensurate rise in profits, it is encouraging to note that the companies that added to their staffs last year expect to boost gross revenues in 1998, Saline said.
“You’ve beefed up your staffs, you’re ready to turn this thing around, and that’s very encouraging,” he said.
As in 1997, companies in the relatively high-paying manufacturing and construction sectors are expected to lead the way in hiring this year.
About 61% of the manufacturers in the survey plan to hire additional workers in 1998, compared with 53% last year. About 56% of responding construction companies plan to add employees this year, compared to 44% in 1997.
Chester Jay, president of Westlake-based C & H Construction, which specializes in erecting commercial buildings, expects to hire 60 to 100 new employees in the next year.
“I’m seeing more commercial [building] than I have in 10 years,” Jay said, adding that he expects his company’s gross revenues to jump by at least one-third. “You can go from here to Ventura and it’s just amazing the building that’s going on. . . . For what we’ve been through the last 10 years, it’s amazing that it’s coming back this strong.”
But the difference between today and the booming 1980s is that office builders are pre-leasing their buildings rather than constructing on speculation, he said.
That more conservative approach bodes well for continued economic growth, said Mel Sheeler of Ventura-based Hilford Moving & Storage.
The company grew 30% last year and anticipates a similar increase during 1998 as both businesses and individuals increase the size of their offices and homes.
“I just hope we can sustain the economy and don’t let it get out of control,” he said. “Keep interest rates low and inflation low and keep profitability up.”
Schniepp expects exactly that.
Inflation was only 1.6% in Southern California in 1997, the second consecutive year that it remained below 2%. That is indicative of one of the most anti-inflationary environments ever, he said.
Employment growth continues to clip along at a healthy 2% to 3%, with the baby boomlet and aging populations responsible for an increase in jobs in the education and health-care fields.
Those demographics are also fueling the strong housing market and higher discretionary spending that is expected to sustain long-term growth over the next 20 years, causing more wealth to be created in the country than ever before, Schniepp said.
Having said that, he admitted that the rate of growth makes for a pleasantly dull economy.
“The economy is doing fine,” Schniepp said. “It’s something we don’t worry about.”
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Survey Responses
City National Bank analyzed surveys from 842 local businesses on a variety of economic indicators to assess what percentage experienced increases or decreases in 1997, and what percentage expect increases or decreases for 1998. Here is a sample of the responses:
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1997 results 1998 projections Increase Decrease Increase Decrease Sales 62% 15% 71% Profit as percentage of sales 21% 55% 9% Employment 38% 11% 47% Space requirements 31% 4% 28%
Sales 5% Profit as percentage of sales Employment 3% Space requirements 3%
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Source: City National Bank
