2010-07-01 / Front Page
It may be a ‘double dip’ recession, experts say
Despite hopes for a turnaround this year, California’s economy will continue to sputter until the business climate improves and unemployment drops, experts said Tuesday during a state and federal economic forecast at the Lundring Events Center on the campus of CLU in Thousand Oaks.
California’s retail sales have improved slightly in recent months, but job growth will stay weak and unemployment will hover at more than 11 percent because businesses remain wary about investing in the state’s languishing economy.
“We’re looking at a long stagnant period,” said Bill Watkins, executive director of the California Lutheran University Center for Economic Research and Forecasting. Many attribute California’s ongoing economic troubles to the mid-2000s housing bubble, but Watkins said other factors are also in play.
California has had no sustained job growth since 1990, a problem masked by the bubbles in technology and real estate.
The lack of progress also can be attributed to soaring taxes, still-high housing costs, lack of investment in infrastructure and a decline in the quality of public education.
But the bigger problem hails from the state’s budget shortage and its excessive regulations, Watkins said.
“Business abhors uncertainty, and California has a bunch of uncertainty,” he said.
Gary Wartik, manager of economic development for Thousand Oaks, echoed many of Watkins’ sentiments.
“Obviously jobs are key, but the economy will have to get stronger before we see any real improvement in the labor force,” Wartik said.
Local economy a step ahead
During the recession, Conejo Valley has performed better than most areas in Southern California because it lost fewer jobs, Wartik said.
The Conejo Valley is home to some 320 manufacturing companies.
Retail sales are down 22 percent compared to two years ago but showing signs of improvement as consumers make more purchases to replace their wornout possessions.
For example, Wartik said people buy new cars when their old ones become too costly to repair.
To create more sustainable wealth in the region, the city of Thousand Oaks offers a program that teaches companies to be competitive in international markets so they can sell more goods abroad. The city also works with the Economic Development Collaborative of Ventura County to assist large and small businesses.
“But no community is an island. We’re all part of the bigger economy,” Wartik said. “We need to start by sustaining what we already have. Then we can attract new businesses,” he said.
Watkins said, contrary to popular opinion, most economists believe immigration is good for the economy. “I know it’s politically incorrect, but there is no problem that we have right now that couldn’t be solved by a few million immigrants,” he said.
An influx of skilled workers and people with money would create a surge in housing demand and improve overall commerce.
“We need risk takers and ambitious people. Immigrants start businesses at a higher pace (than Americans,”) Watkins said.
Dao Minh Doan, chair of the Ventura County Civic Alliance— a nonprofit organization that oversees economic growth, social equity and environmental issues— said the value of untrained immigrants such as farmworkers shouldn’t be overlooked.
“They play a vital role because they help to keep the cost of food down,” Doan said.
Farming produces $100 million worth of produce annually in Ventura County.
Ultimately, Doan said, California legislators must take action to help with the recovery.
“We go in circles in Sacramento, so we cannot get clear directions. Uncertainly is a big deal because the weakness of governments percolates down to businesses and residents,” Doan said.
Watkins said the Legislature could foster business recovery by easing regulations.
Elected officials, he said, should get rid of the two-thirds voting requirement that makes budget adoption difficult.
“Everybody has a veto so nothing happens. It’s abundantly clear to me that we need to make a change,” he said.