San Diego's 2015 Economic Outlook
Recovery continues to restructure regional economic positioning
Kelly Cunningham, NATIONAL UNIVERSITY SYSTEM INSTITUTE FOR POLICY RESEARCH
Monday, February 23, 2015
This analysis and outlook for San Diego’s economy in 2015 is presented by the National University System Institute for Policy Research. Advanced technology industries are seen continuing to be primary drivers of the region’s economic vitality with unusually well-diversified mix of innovative sectors.
“San Diego continues to emerge from the Great Recession that technically ended five years ago,” says Kelly Cunningham, National University System Institute for Policy Research economist and senior fellow. “The recession hastened economic transformation that had been on-going for some time. The disruption accelerated transition from historical dependence upon tourism, military bases, defense procurement, and real estate development to a much more diversified and entrenched mix of scientific research, development, and productive innovation.”
San Diego continues to emerge prominently positioned in the ever expanding global, knowledge-based economy. Adapting this more entrepreneurially-based focus, San Diego’s economy become more globally and competitively positioned.
Highlights of the Institute’s 2015 economic outlook include:
- San Diego’s gross domestic product (GDP) projected to grow 3.0 percent in 2015, slightly slower than 3.1 percent growth estimated in 2014.
- Local economic momentum will continue to slightly outperform the rest of the state and nation based on comparative projections for job growth.
- San Diego’s unemployment rate is forecast to further decline in 2015 to 5.7 percent, slightly below 5.8 percent projected for the rest of the nation, and remaining more than a full percentage point lower than California at 7.0 percent.
- San Diego’s employment landscape becomes ever more hour-glass shaped with higher-wage jobs accumulating on one end, lower-wage jobs maintaining relative proportions, and middle-wage jobs being squeezed out the most.
- San Diego’s population growth will reach a 15-year high in 2015 with 40,500 additional residents.
- Domestic migration turned positive again marking a significant turning around of more people moving here from other parts of the country. This is an important indication of the economy improving and better job prospects drawing more people to the region.
- Construction of new housing units surprisingly faltered in 2014, not from lack of demand, but deficiency of land available for building and affordability. These challenges will persist in 2015 to constrain building that would otherwise occur.
- After falling to a nearly two-decade low in 2013, San Diego’s median household (adjusted for inflation) is estimated to have improved in 2014 and will continue rising in 2015 with cost of living increases remaining somewhat muted.
- Taxable sales significantly improved the past five years, but adjusted for inflation in 2015 will still not reach pre-recession highs.
- San Diego’s inflation rate decelerated as gas prices fell in the final months of 2014 limiting local inflation to “only” 2.0 percent. Unfortunately, gas prices are not expected to remain down and will contribute to inflation rising to 2.5 percent overall in 2015.