2013 July PASO Magazine

Economic vigor builds in SLO County
By Chris Weygandt Alba
According to a leading California economic analyst
a resurgent economy has invigorated the Central
Coast this year. San Luis Obispo County saw
a spike in construction, agriculture exports, jobs,
taxable sales, and real estate between March 2012
and April 2013.
“Things changed pretty dramatically this
year,” said economist Christopher Thornberg of
Beacon Economics in a Mid-Year Update organized
by the Central Coast Economic Forecast
Project, held June 6 in Atascadero, and sponsored
by the Paso Robles and Atascadero Chambers
of Commerce. “I’m as positive as I’ve been in the
past couple of years.”
He said the modest momentum in the U.S.
economy makes him optimistic about the months
ahead. Thornberg, former chief economic advisor
to the California State Controller’s Office, is encouraged
by gains in the U.S housing market, job
growth, business investment, industrial activity,
energy production, consumer spending, and personal
income and net worth.
“Corporate profits are at a record high,” Thornberg
said. “Labor markets are looking much better
today than they were a year ago. Consumer
finances are bouncing back. Folks are taking more
money home. Disposable income is higher than it
was six months ago. Net worth is up to its highest
level in years. Consumers really have started to
move forward.”
“Not everything is fine on a national level,”
Thornberg added. “The politics of debt ceilings
and federal spending is a big risk. There are many
long-term issues to address. But the positives are
outweighing the negatives. Things seem to be
moving forward at a fairly solid rate.”
Recovery is more robust in California and the
Central Coast, Thornberg reported. A steady upswing
in key areas this year has propelled the state
and SLO County to the forefront of growth in
the nation. The highlights include:
Job Market Grows
In the latest analysis by Beacon Economics, “California
is the eighth fastest-growing labor market
in the nation,” said Thornberg, “and SLO County
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Estrella 18
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Family Praise 46
ranks fifth in the state in job growth.”
Since the local labor market hit bottom in July
2009, SLO County has added 11,600 jobs and recovered
nearly all those lost during the downturn.
Total private payrolls grew by 4% from March
2012 to March 2013, and unemployment dropped
from 8.3% to 6.4%.
The largest growth occurred in arts and entertainment,
professional and business services,
real estate, and construction. Jobs declined somewhat
in wholesale trade, manufacturing, and state
government.
In the farm industry, “Ag exports are booming,”
Thornberg said. That produced more jobs and a
record $861-million in agricultural commodities
in 2012.
The hospitality/leisure sector also saw job and
payroll gains, with a boost in tourism and hotel
occupancy rates. The local wine industry had a
bumper crop and great prices. Noting a steady
increase in international visitors, Thornberg
quipped, “The world has noticed that the stuff
they make in France is swill.”
Real Estate Surge
The supply and demand for housing in SLO
County is a boon to the whole economy, Thornberg
reported. With low interest rates and lower
home prices since the housing bubble burst, he
said, “The cost of buying a home is about the
cheapest it’s been in 30 years.” So demand is
up, but the inventory of available homes is falling,
while foreclosures and defaults are in steep
decline. The dynamics push home prices higher.
Local home prices are up 16% since hitting bottom
in 2011. In the first quarter of this year, the
median price of an existing home in Paso Robles
hit $341,839 — 11% more than a year ago — accompanied
by a 10% increase in sales. Thornberg
believes the combination of buyer demand and
dwindling supply will continue to boost home
prices in the coming year.
Collateral Benefits
The housing surge stimulates other parts of
the economy, Thornberg reported. With rising
home prices, he said, “People are starting to
have equity in their homes and have begun to
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extract it again, for the first time in years, to use
as disposable income.”
Taxable receipts have risen throughout the
county, as household balance sheets have improved
and consumers feel more comfortable
with their purchasing power. Auto sales were
particularly robust in 2012.
Construction is on the rise in SLO County,
Thornberg said. Building permits issued for new
homes rose almost 32% during February 2012-13
over the prior year.
Permits for multifamily units have exploded,
surging over 400% in the same time period, fueled
by the number of residents who can’t get a mortgage.
In the rental market, vacancy rates are down
and rents a little higher
Commercial building has doubled in value over
the previous 12 months, Thornberg said. Although
the retail market remains comparatively sluggish,
commercial vacancy rates show gradual improvement.
Overall, Thornberg said, “The second half of
the year is going to come out strongly.”
“Local home prices are up 16%
since hitting bottom in 2011.”
- Economist Christopher Thornberg
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Worship Directory 61
York, Cheri 63
Zumstein, Kurt 58
62 Paso Robles Magazine, July 2013