Central Coast:

Early 2021 is Pivotal Point for Region to Regain Economic Footing

The Central Coast economy is finally starting to turn a corner as it enters the end of a long 10 months of suffering under COVID-19 and fluctuating statewide government restrictions. In 2021, the first few months remain critical for the job market to take its next meaningful step forward.

That’s according to the most recent forecast and trends presented by Beacon Economics during the annual Central Coast Economic Forecast event’s third and final installment of this year’s virtual conference. These experts’ opinions spotlight intriguing viewpoints and projections so your credit union can plan appropriately.

‘Central Coast Economic Forecast’ (annual event)
Presented on Nov. 18 by Beacon Economics during the third (and virtual) installment of this year’s annual conference (“San Luis Obispo County: Economic Update and Outlook”):

As local Central Coast leaders prepare for the first half of 2021, a strong rebound in regional leisure and hospitality industries (and jobs) is expected. The region’s commerce has been hit by the brunt of various local and state government shutdowns over the past 10 months, and even before the pandemic recession took place the area was already suffering from low housing supply coming on the market (which helps drive local working-age population growth and economic activity). However, these short-term headwinds are increasingly being offset by preparation for a COVID-19 vaccination distribution from the federal government level down to individual states and localities possibly starting in first-quarter 2021, thus potentially bringing local consumerism and business activity back to mid or full-speed sometime during the first two quarters of 2021.

While it hasn’t reached its pre-pandemic level, consumer spending in San Luis Obispo County during October was as robust as it’s ever been during the past nine months. In March and April, this measurement plunged 40 percent from early 2020, but as of October it was only 10 percent below its normal level experienced before COVID-19 hit the state and local economies. At times, local consumer spending’s recovery has outpaced the entire state of California over the past 10 months — but today, both regions are nearly in-line with each other.

While sales tax revenue from business activity in San Luis Obispo County was still down by -16 percent year-over-year as of June 2020, third quarter data will show a significant rebound. On an annualized basis, the industries still recovering from the COVID-19 recession earlier this year are connected to vehical/auto sales, ground and air transportation, consumer goods, restaurants, hotels, gas stations, accomodation, and arts/entertainment. However, local building activity, residential and commercial construction, food/drug services, and certain areas within non-durable and durable goods production remain a bright spot and have helped carry the economy over the past 10 months. Local construction revenues have been holding steady in 2020, with several firms projected to show strong performance in 2021 (there are also a limited number of skilled construction and trade workers). Also, transient occupancy tax (TOT) revenue increased year-over-year by 0.7 percent from August 2019 to August 2020 — a bright spot. That same month, the county reported an occupancy rate of 65 percent (higher than Napa County at 49 percent, Santa Barbara County at 62 percent, California at 55 percent, and the United States at 49 percent).

Central Coast hospitals are increasingly getting a better grasp at dealing with the COVID-19 pandemic and its impact on local households and workers. Data and scientific analysis is much better than it was at the onset of the outbreak, and health/education employment (while still below its pre-pandemic level) is now only -6 percent down from February of this year in San Luis Obispo County and -7 percent in Santa Barbara County. Additionally, the past few months have seen a drop in in-patient visits due to the COVID-19 scare.

After spiking at 14 percent in May, the Central Coast’s unemployment rate had fallen to approximately 7 percent as of October. These figures represent Ventura, Santa Barbara, San Luis Obispo, and Monterey counties — all combined. Meanwhile, the local labor force (pool of adults willing and able to work) seems to have finally leveled-off in San Luis Obispo and Santa Barbara counties (down -4 percent in the former and -8 percent in the latter). Certain individuals are leaving the labor force due to COVID-19 and economic reasons, such as retirement candidates, mothers, and others. Total non-farm payroll employment in just these two counties combined was still down -12 percent in September (as opposed to -17 percent in May) from pre-pandemic employment levels.

Specifically, San Luis Obispo County’s total non-farm employment shrank by 23,500 jobs in March and April, only to recover 8,300 back by August (but then lose 300 positions in September). The economic recovery’s path forward has become wobbly as local and state lockdowns persist due to the government’s reaction to the COVID-19 pandemic. The industries suffering the most between September 2019 to September 2020 (annualized perspective) are leisure/hospitality, manufacturing, and local/state government, while those faring in the middle are professional and business services, construction, retail trade, education/health services, and logistics. Additionally, those faring the best are in the industries of finance, “other” services, wholesale trade, and information/technology. After roaring back in June and July (from a percentage growth perspective), total local employment growth on a monthly basis slowed down to near zero percent by September.

You can view the entire archived Central Coast forecast presentation slides. Just click here to read more about COVID-19 and economic trends in the local office and retail commercial-space markets, the cost of rent, commercial construction activity, residential home prices, building permits, and home sales over the past 10 months. Included in the slides are also pre-pandemic trends in these areas, as well as the local labor market, employment, and job/industry breakdowns to give early 2020 context.

Caltrans’ County-Level Economic Forecast
Released on Dec. 1 by Caltrans (the California Department of Transportation):

In 2021, job growth will vary along the Central Coast depending on the county. Monterey, Santa Barbara, and Ventura counties are expected to regain most of the jobs that were lost during the COVID-19 recession earlier this year. However, San Luis Obispo County is expected to regain fewer than half of the jobs lost during March – April of 2020. In all four counties combined, unemployment rates are expected to remain elevated for several months (maybe even a couple of years depending on the locality), but they are still likely to improve quicker than during the prolonged period after the Great Recession of 2007 – 2009 (which took several years to recover).

You can view Caltrans’ economic, demographic, housing, population, job, inflation, and industry breakdown forecasts for each county. Click on the following to view local trends and projections from 2021 – 2025: San Luis Obispo County; Santa Barbara County; Ventura County; and Monterey County. Or you can click here to view any county in California.

Central Coast: Demographics, Labor, Education & Economic Resources

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