SLO County's strong economic recovery expected to continue

acornejo@thetribunenews.comNovember 22, 2013 

San Luis Obispo County is in the midst of an economic recovery — and is one of only four regions in the state to exceed its pre-recession peak.

That growth is expected to continue next year through 2016, said Jordan Levine, an economist with Beacon Economics, an independent economic research and consulting firm that presented the annual Central Coast Economic Forecast on Friday.

The local recovery is expansive, crossing all sectors and cities, including growth in the agriculture, tourism, energy, and construction industries. Tourism and the wine industry continue to be large drivers of that success. According to Levine:

  • Local hotel average daily room rates as well as occupancy have increased over the past year.
  • The county has one of the lowest unemployment rates in the state, and jobs have been created for people across all income spectrums. The jobless rate is expected to drop to 5 percent from 6.5 percent by 2016.
  • Of the 11,200 jobs lost during the recession, 11,400 have been added back, an increase of 12 percent since 2009. The jobs were spread across the spectrum, with 60 percent of them paying $40,000 or less annually and the remaining 40 percent paying more.

”The job growth we are seeing in San Luis Obispo County is real,” Levine told about 500 people at the Alex Madonna Expo Center. In addition, consumers are spending more and taxable sales continue to increase.

The largest rebound in taxable sales locally was in the business and industry sector, which includes the recent solar projects; those experienced a 35 percent gain year to date at about $6 million compared to the same period last year. Auto sales were also up 16 percent during the same time frame.

The unincorporated areas of the county saw the largest sales tax growth, followed by Pismo Beach and San Luis Obispo.

The wine industry has played a major role in the economic recovery, Levine said. It has not only generated more farm jobs but also has become more vertically integrated, with the production of more beverages here, he added.

In 2013, there were 250 wine-related firms providing jobs in areas such as vineyards, wineries, wine wholesalers and beer and wine stores.

“This is an increasingly important sector,” said Levine.

That success, however, comes with tradeoffs, such as impacts to water availability. The community must decide how those resources will be allocated, he said, adding that the economic viability of the wine industry should be a factor in that decision.

Another good indicator that the local economy is headed forward is the slow but steady rebound of the housing market. The median price of homes in the county has grown 15 percent year over year, according to the Beacon report.

The median price of a single-family home in the county is $442,301 compared to $383,567 in 2012. Sales of existing homes increased in all cities, except for San Luis Obispo.

Seven counties, including Santa Barbara and Monterey, saw greater increases than San Luis Obispo in median home prices in the past year. That’s not necessarily a bad thing, said Levine.

“San Luis Obispo didn’t fall as far, thus there is a slower incline,” he said.

The county’s median home price is expected to grow to $554,178 by 2016.

Another good sign is the latest surge in building. San Luis Obispo County is leading the state in the percentage of new multi-family and single-family building permits, with a 92 percent increase. Even though the numbers grew from very low levels, it’s still a good sign, Levine said.

“San Luis Obispo County is poised for continual growth in 2014 and beyond,” he said.

Economic forecast

Here’s a look at what the next four years might hold for some key economic indicators in San Luis Obispo County:

2013201420152016
Total population273,305275,670278,185280,812
Unemployment rate6.56.25.55.0
Median home price430,841490,398525,768554,178
Home sales3,2563,5713,6143,557
Taxable sales (millions)5,071.35,055.25,365.85,740.7

Source: Beacon Economics

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