San Diego’s economy seems to be doing far worse than everyone realized.
San Diego’s gross domestic product shows much weaker activity than formerly reported, according to newly released estimates of GDP by metropolitan area.
This chart compares the previous estimates of “real” change in GDP to the latest estimates:
The revisions indicate San Diego’s GDP growth between 2003 and 2005 was much higher than formerly reported, and the recession came sooner and significantly worse. The past few years also show much weaker growth than previously estimated.
The Commerce Department provides GDP estimates of the nation’s 382 metropolitan areas. GDP by metropolitan area is the sub-state counterpart to the nation’s GDP, the most comprehensive and featured measure of U.S. economic activity. GDP by metropolitan area is derived by the sum of GDP originating among all industries for each metro area.
The current-dollar statistics are valued as the prices during the period when the transactions occurred, or at “market value,” also referred to as “nominal GDP” or “current-price GDP.” Real values are inflation-adjusted to exclude the effects of price changes.
San Diego’s economy slowed from 3 percent growth in 2013 to only 0.4 percent by 2015 and 0.3 percent in 2016. Since 2014, San Diego’s economic growth significantly lags both California and the United States.
So far, in 2017 job growth locally has been slowing.
The slowdown suggests GDP growth in 2017 will also further decrease. Our estimate of 0.2 percent for San Diego nearly falls to negative, which would indicate recession. Perhaps history repeating, San Diego may once again lead the rest of the state and nation into recession as it did 10 years ago.
This chart of per-capita real GDP reveals how poor San Diego’s recent economic performance has been in comparison with the rest of the nation, state and other major California metro areas. Only San Diego’s “real” per capita GDP has declined since 2013.
San Diego’s per capita GDP fell behind California in 2016 for the first time in a long time, as well as below Los Angeles. Northern California (more precisely, the Bay Area) is outperforming Southern California by far.
San Diego’s sputtering economy may largely be due to the downsizing of the military. Active duty military personnel in San Diego peaked in modern times at 112,000 in 2009; as of 2015 – the latest year available – the number was 98,828, according to the Commerce Department.
The unreasonably high cost of housing is also driving people away. Constraints on businesses, such as high minimum wage and excessive regulations, may contribute to businesses and jobs going away as well.
The new report shows industry sectors declining in San Diego include nondurable-goods manufacturing, real estate, rentals and leasing, and professional and business services.
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Originally posted at Voice of San Diego.
Kelly Cunningham is a senior economist in the National University System.