New Jobs, Home Sales Fuel Red-Hot Economy
Fueled by broad-based job expansion and a red-hot real estate market, the Ventura County economy is at its strongest point since 1990 and is poised to continue growing through year’s end, an economist said Wednesday.
But the growth will moderate as effects of Asia’s financial crisis ripple across the U.S. economy, he warned.
“It seems to us, at this juncture, that things are pretty good, but there may be some slowing due to the market problems in Asia,” UC Santa Barbara economist Mark Schniepp told about 30 business leaders at the Orchid Professional Building in Camarillo. “But this isn’t a downturn. . . . All the indicators point to Ventura County enjoying sustained growth, just not as explosive.”
During a two-hour seminar, Schniepp detailed the finer points of the county’s rosy economy during the university’s midyear update of its Economic Forecast Project for Ventura County.
The report, which tracked virtually every economic indicator since Jan. 1, revealed that confidence among area business owners about their economic futures had eroded slightly. But it also illustrated a regional economy that has emerged from the near-crippling recession of the early 1990s stronger and able to make significant gains well into the 21st century.
Though fewer Ventura County business owners said they believe next year will be better than this year--dropping from an all-time high of 54% in 1997 to about 46% at midyear 1998--Schniepp cautioned that those surveyed may have felt that the good times are so good that they couldn’t get any better.
“To be honest with you, we’re wondering what business owners were thinking of,” he said. “That doesn’t necessarily mean things have gotten worse. Business owners might just think that things have plateaued.”
Though the Asian currency and market problems and the spiraling crisis in Russia will continue to affect the U.S. economy, Schniepp said their effects would be minimal and that the nation’s economy was strong enough to absorb any global economic shock.
In addition, the recent seesawing of stock indexes on Wall Street was not the far-off growl of an approaching bear market, but the jitters of overly sensitive investors.
“It’s been an exciting summer,” Schniepp said of the recent economic turbulence. “But even with the rattling you have to look very hard to see any indication of a downturn.”
According to the study, Ventura County’s nonagricultural job growth, which experts call the lifeblood of any hard-charging economy, increased 3.2% during the first six month of 1998.
Most of those jobs were created in the durable goods manufacturing sector, which are generally high-paying and stable positions. Other areas that have experienced sizable job growth are business services, education, retail trade and communications.
Schniepp said another indicator of the county’s robust economy is retail sales, which jumped 5.8% from the first half of last year, and unemployment, which has fallen to just 5.4% from more than 6% a year ago.
In addition, the median income of county residents has increased 5.2% to $26,500 which, according to Schniepp, helped propel the 29% increase in the number of homes sold in the county through June 30.
Increased home sales are the most solid indicator of a vibrant economy, Schniepp and other experts said at the seminar.
The explosive growth in the number of sales and the severe shortage of homes on the market have led to the sizable 9% average increase in prices.
“The number of sales is massive,” said Mary Riddle, a senior economist with the university’s forecast project. “Every city is seeing an increase. . . . Because of the low interest rates, job growth, rising incomes and consumer confidence, residents feel good about buying a home.”
However, because of the severe shortage of housing, which is expected to continue throughout the next several years, buyers typically must compete with other bidders and offer more than a home’s listed price.
“It’s a sellers’ market right now,” said Mary Hall, a Realtor who works in the Conejo Valley. “It’s not uncommon for people to pay $10,000 or $20,000 more for a home than what it’s listed for.”
Though Ventura County’s economy is expected to slow a bit with fewer jobs being created in the course of the next year, Schniepp predicted that during the next six months residents should expect to see their local economy remain much the same as it is today with a few exceptions.
The pace of job growth as well as income improvement will moderate through the end of the year. And the housing market will remain wild and could get even wilder as more people seek to relocate to the county’s suburbs.
“Things are very positive right now and there’s nothing that would lead us to think anything will change that drastically,” Schniepp said. “When all is said and done, the county’s positioned well and will create more jobs in 1998 that any other year this decade.”
