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The 2008 Goleta Economic Outlook
will be held by the Goleta Valley Chamber of Commerce on
July 20th, 2007
Goleta Forecast Highlights
California and National
The United States economy continues to exceed
expectations. Indeed its growth has been so strong that
the Federal Reserve is still raising short-term interest
rates after two years. California’s economic growth has
been even stronger than that of the United States, and
more surprising. We believe that the probability of a
United States recession is increasing with each FOMC
meeting that brings an interest-rate increase. However,
the data are still strong, implying that the most likely
scenario is no recession. If the FED does induce a
recession it will likely be in 2007 and it will likely
be mild. The impact of a mild 2007 recession on
California will likely be less than that of 2000-2001
recession. Even with a construction slowdown, the State
does not appear to have a sector that would experience
the pain that accompanied the dot-com bust. California’s
economy has been exceptionally hot, with an economic
growth rate in excess of that of the United States.
Given the State’s climate, diversified economy, changing
demographics, educational system, and location on the
Pacific Rim, we expect the State to overcome its many
negatives (high taxes, high housing costs, budget
deficit, governmental gridlock, and more) and continue
to prosper.
County
Santa Barbara County continues to consist of two
economic regions. The South Coast is relatively wealthy,
but it is loosing population and jobs. The North County
is much less wealthy than the South Coast, but it is
gaining population and jobs. Except for farming and a
very few exceptions, tradable goods producers have left
the County. Consequently, the County’s employment base
is dominated by government-related or
non-tradable-goods-producing organizations. These
include Vandenberg Air Force Base, the federal prisons
at Lompoc, the University of California Santa Barbara,
two community colleges, school districts, the Chumash
Casino, hospitals, and County and local governments.
While many of these organizations are subject to funding
cutbacks when California has state budget cutbacks, many
are, in large part at least, immune to cyclical
fluctuations. This indicates that Santa Barbara County’s
economy should be significantly less volatile than that
of California or the United States.
City
Since incorporation, a large portion of the City’s
leadership has worked toward eliminating growth. While
the City has not quite achieved its goals, it has
realized significant successes. Indeed, Goleta’s
population has been declining. In part this is due to
the very low number of housing units permitted. In the
years 2003, 2004, and 2005 the city approved 13, 7, and
4 new single-family housing units, respectively, for a
total of 24 units. We expect the City to issue 5 new
single-family unit permits in 2006. They have not
approved any multi-family units since 2002. The
combination of very few new housing units and declining
numbers in existing units (brought about by changing
demographics) has resulted in a falling population.
Jobs, by contrast with population, have been growing a
bit, albeit at rates significantly below those of the
United States and California. Goleta’s job growth was
negative in 2005, but 2006 job growth appears to be
positive. The City’s economy (Gross Product) has been
growing at rates below the United States and California,
but at more rapid rates than jobs. This reflects
increasing productivity and changing job composition. |
