Regional economists are positive, but warn of too-high housing costs and an aging workforce

A trio of experts gave a largely positive outlook on the state of the economy Friday during a Newport Beach Chamber of Commerce forum.

The event at the Balboa Bay Resort featured UCLA’s Jerry Nickelsburg, an adjunct professor of economics and director of the UCLA Anderson Forecast; Christopher Schwarz, an associate professor of finance at UC Irvine and faculty director of the school’s Center for Investment and Wealth Management; and Jonathan Lansner, a business columnist with the Orange County Register.

Nickelsburg and Schwarz pointed to strong economic indicators, such as low unemployment and strong job creation in California, but also noted impediments to growth, particularly an unaffordable housing supply and an aging workforce.

Nickelsburg noted how home prices in San Diego, Los Angeles and San Francisco have not only rebounded from the recession, but have surpassed their 2007 housing bubble highs. He said recent bills passed in the state Legislature that look to spur new housing by as much as 300,000 units will help, but only nominally in a state of some 40 million people.

“They’re a spit in the ocean,” Nickelsburg said. “They’re not gonna do much for this.”

Schwarz said most areas of the economy, such as bonds and real estate, have been faring well. (Low oil prices, which climbed back to $60 a barrel this week, are a notable exception.)

He said there’s always the fear, though, that the same economic tides that rise may also fall.

He noted that the U.S. working age population — ages 15 to 64 — is not growing, limiting future job growth.

Schwarz said factors that could shock economic productivity are artificial intelligence and automation, two emerging possibilities that could damage more of the workforce than most realize.

He noted that 3.7 million Americans are truck drivers. If trucks became automated, he said, retraining that many people in another trade would prove enormously difficult.

Schwarz added that Walmart is a top private employer in 19 states. Should the company change itself to require fewer employees, like displacing truck drivers with self-driving technology, the retail workforce and overall economy would face great difficulty.

Lansner, who’s been covering business for the Register since 1986, said it’s practically impossible to tell if another housing bubble is en route. He noted that affordability remains an issue, but said in his experience, the so-called housing shortage has been a recurring theme in Orange County for more than 30 years.

Lansner said historically low interest rates have helped home buying, but continually rising rents endanger chances of affordability.

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