Local Economy Hits High Mark for Decade

Ventura County’s economy continued to pick up steam through the first half of 1999, setting a pace to make this year its most successful of the decade.

In its midyear review and forecast, the UC Santa Barbara Economic Forecast Project found that the local economy, primed by increased consumer spending and soaring business confidence, had grown through June at a healthy 4.1%.

Comparatively, growth in all of 1998--the county economy’s most successful year this decade--came in at 3.5%.

“If you had asked me six months ago where the economy would be right now, I wouldn’t have predicted this,” said forecast Director Mark Schniepp. “There hasn’t been this slowing that we would have expected to see by now. . . . Things have just gotten better.”

Indeed they have.

Leading economic indicators, such as employment growth, resident spending and earned income averages, all remained solid through June.

Through the first six months of the year, about 5,000 jobs have been created in the county, most in service, retail, construction and education. That’s closing in on the 8,500 jobs created during last year’s explosive economic expansion.

If the current climate continues, economists expect that as many as 10,000 new jobs could be created by the end of the year.

“Things are still very strong in the county,” said Dee Johnson, a labor market analyst for the state’s Employment Development Department. “[Employment] growth has been spread around, all at real healthy rates.”

Various economic sectors in the county--such as manufacturing, retail sales and services--all continued to outperform earlier growth estimates, the report found.

In addition, the markets for both residential and commercial real estate remain at near-record highs, indicating continued consumer confidence in the economy and increasing wages.

Despite the substantial uptick in residential building this year, median home prices in June were at a record high of $244,000.

Analysts expect property valuations will continue to climb through at least the next six months.

Commercial real estate remains a commodity in short supply, with vacancy rates for office and industrial properties dropping to near historic lows, despite a substantial increase in building and the steady stream of capital financing, which in June totaled almost $29 million.

That’s up by almost $10 million from the year before.

But will these good times last?

Definitely not, experts said, but when they’ll begin to cool is difficult to say.

There are a number of things emerging that could slow the state’s and county’s economic engines.

First and foremost, the stock market has begun to show some signs of weakness, with high-technology and Internet stock values deflating, some by as much as 50%.

Economists say that if the market growth drops significantly, it could lead consumers to keep a tighter hold on their money, which could ratchet down growth rates here and across the country.

Second, industrial production and manufacturing have also begun to slow, which economists point to as a symbol of a broader cooling across the economic landscape.

Third, the economy, both locally and statewide, has been growing so rapidly that experts believe it may be healthier for it to slow rather than keep its blistering pace.

“These kinds of growth rates are not sustainable,” Schniepp said. “At some point there has to be a cooling. That’s all there is to it.”

Over the next six months, Schniepp said he expects the economy to keep growing, with none of those slowing factors becoming apparent locally.

Jobs and income are both expected to rise, which should keep consumer spending high through the end of the year.

However, even if things were to slow immediately, economists said the year would still be chalked up as success.

“No matter what happens, 1999 is going to be a good one,” Schniepp said. “What’s been happening over the past six months has been so strong that whatever happens from here on out won’t make this a bad year.”