SLO County’s economy will continue to grow in 2018 — but how long can it last?
It’s been a relatively rosy year for San Luis Obispo County’s economy: Unemployment has consistently hit record lows and is the lowest among all Central Coast counties, while new job creation continues to grow in most industries each month.
The good news is expected to continue for the near future — but not for much longer, economists told about 500 attending the Central Coast Economic Forecast on Friday at the Madonna Expo Center.
Don’t think this means the economy is grinding to a halt. We are just hitting the upper limit of our economy’s ability to grow.
Robert Kleinhenz
Beacon Economics“We’re really at our limits in terms of our ability to grow the economy right now, and those limits really have to do with our labor force constraints,” said Robert Kleinhenz, executive director of research at Beacon Economics.
According to Kleinhenz, starting in mid-2016, both the county and state saw a slowdown in the pace of job growth. In the years following the recession, both had been reporting solid gains each month.
For example, between September of last year and the same month in 2017, job growth was only 1.1 percent.
The slowdown is largely due to the local labor force approaching full employment, he said, noting that unemployment is the lowest it’s been since the recession. As the county edges closer to full employment, it’ll become more difficult for employers to fill open positions.
Meanwhile, the pressures of housing in SLO County — where high housing costs continue to outpace wages and low inventory makes options scarce — will make it difficult to attract more workers to the area.
Current projections say the county will add 2 percent more jobs in 2017 than in 2016, before slowing to less than 1 percent next year, Kleinhenz said.
Kleinhenz was careful to note that this does not mean another recession is looming in the county’s future.
“Don’t think this means the economy is grinding to a halt,” he said. “We are just hitting the upper limit of our economy’s ability to grow. We continue to see a growth trajectory, it’s just going to be a slower trajectory.”
Looking ahead even further, Kleinhenz said it would also be helpful for the county to focus on growing under-represented industries, such as professional, science and technical services, while continuing to grow the county’s major industries like leisure and hospitality and retail.
“The most important thing for us to keep in mind as we look ahead is that 2018 is going to be another year of growth,” he said. “That’s an opportunity for you to continue to build your business, to build your organization, over the next year plus, but it’s also the best time for us to think about some of these long-term considerations for the region that we need to deal with over the next five-year horizon, over the next 10-year horizon.”
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This story was originally published November 3, 2017 at 3:00 PM with the headline "SLO County’s economy will continue to grow in 2018 — but how long can it last?."