With consumer spending on the rise, a housing market in recovery and unemployment falling, San Luis Obispo County’s economy is on the right track.
The county’s economy, which grew 3.4 percent in 2012 compared to a year ago, is leading the way in California, growing faster than San Francisco and San Jose, two regions among 14 in the state. Meanwhile, at 7.4 percent in September, the county’s unemployment rate is one of the lowest in California.
Although the pace of growth is slow, the positive economic trends will continue in 2013 and beyond, said economists for Beacon Economics, a Southern California-based independent economic research and consulting firm that presented the Central Coast Economic Forecast on Friday.
Christopher Thornberg, founding partner of Beacon, said San Luis Obispo County is on the mend, and absent poor decisions made by those wielding political power on the state and federal levels, there’s no reason to think the economy will not continue to improve.
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“We’re moving in the right direction,” he said.
Jordan G. Levine, economist and director of economic research for Beacon, told about 500 people at the Alex Madonna Expo Center that local spending in a host of categories — automobiles, building and construction, business services, and leisure and hospitality — is up so far this year over 2011, based on the most recent data. Taxable sales in the county increased 11 percent year-over-year based on the most recent data, with the cities of Morro Bay, Grover Beach and Paso Robles bringing in the most.
By far, tourism is credited with having the biggest impact on the local economy, accounting for 1,100 of the 3,300 jobs created this year, Levine said. More tourists, from both inside and outside the state, are visiting the county, staying in hotels and opening their wallets, spending money in restaurants and retail shops, he added.
“San Luis Obispo County is a reason why California outshines the rest of the nation,” Levine said.
Local hotel average daily room rates as well as occupancy have increased over last year, Levine said. In August, the county reported the third largest increase in year-over-year occupancy rates in the state.
“It is tourism that is helping to lift all boats,” Levine said, noting that local tourism is closely tied with the agricultural sector, which also benefits.
Another bright spot is the county’s solar plants: California Valley Solar Ranch and Topaz Solar Farm. They are large projects under construction that will help give the local economy a boost, he said.
“It pushes us out to 2014-15, when the economy is much stronger,” he said. “Even though it’s temporary, it could be the bridge that helps us to get to the point where the economy is firing on all cylinders.”
Other signs of optimism include the strengthening housing market, which Thornberg said “has truly turned the corner” and is attracting first-time buyers and investors, who are “lining up like nobody’s business” to snap up rental properties.
The number of distressed properties — defaults and foreclosures — on the market continues to decline, while sales and the median price have increased. Thornberg cautioned, however, that rising prices is an issue in California because it makes housing unaffordable for many people who want to buy a home.
The median price of an existing, single-family home in the county is expected to rise to $392,225 in 2013, a
4 percent increase from $377,050 in 2012. Sales of existing, single-family homes are forecast to increase 2.8 percent in 2013 over this year.
“People are more confident, and they’re diving back into the housing market and taking advantage of low interest rates,” Levine said.
Overall, the economic outlook for the state and San Luis Obispo is bright, Levine added.
“Indicators show things continuing to move forward,” he said.