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					UCSB Economic Forecast Project
   San Luis Obispo County
Economic Outlook and Forecast




                     Bill Watkins
                 November 18, 2005
               George, Paul, Ringo, and John say:




                     “We’re going to
                      a party party.”




2   UCSB Economic Forecast Project
                   California Gross Output
                     Real Growth Rate
 9.0 %
 8.0 %                                                      Nov. 2004
 7.0 %
                                                            Nov. 2005
 6.0 %
 5.0 %
 4.0 %
 3.0 %
 2.0 %
 1.0 %
 0.0 %
-1.0 %
         1995   1996   1997   1998   1999   2000   2001   2002   2003   2004   2005

3        UCSB Economic Forecast Project
                  San Luis Obispo County
                 Employment Growth Rate

 6.0 %                                                             Nov. 2004
 5.0 %                                                             Nov. 2005
 4.0 %

 3.0 %

 2.0 %

 1.0 %

 0.0 %

-1.0 %
         1995   1996   1997   1998   1999   2000   2001   2002   2003   2004   2005


 4       UCSB Economic Forecast Project
              San Luis Obispo County
          Real Gross Output Growth Rate

 9%
 8%
                                              Nov. 2004
 7%
 6%
                                              Nov. 2005
 5%
 4%
 3%
 2%
 1%
 0%
-1 %
       1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

 5     UCSB Economic Forecast Project
              San Luis Obispo County
           Median Home Price Growth Rate
                 Nov. 2004
20.0 %
                 Nov. 2005
15.0 %

10.0 %

 5.0 %

 0.0 %

-5.0 %
         1995   1996   1997   1998   1999   2000   2001   2002   2003   2004   2005


 6       UCSB Economic Forecast Project
          Dan Says:



             “Maybe this time we
               won’t be low.”




7   UCSB Economic Forecast Project
                   Outline


              Party Time
                  United States
                  California
                  San Luis Obispo
              Changing Times




8   UCSB Economic Forecast Project
       United States’
       Economy


9   UCSB Economic Forecast Project
 Total Employment
 United States
 millions
                                                                  141.8
                                    136.9 136.9 136.5 137.7 139.2
                  129.6 131.5 133.5
123.6 125.7 127.6




1994        1996        1998        2000        2002        2004

 10    UCSB Economic Forecast Project
 Unemployment Rate
 United States
6.1%                                                         6.0%
       5.6% 5.4%                                      5.8%
                                                                    5.5%
                   4.9%                                                    5.0%
                                               4.7%
                          4.5%
                                 4.2%
                                        4.0%




1994       1996           1998          2000          2002          2004

 11    UCSB Economic Forecast Project
 Real Gross Domestic Product Growth
 United States
                     4.5%          4.4%
                            4.2%                                      4.2%
4.0%
              3.7%                        3.7%                               3.7%


                                                               2.7%
       2.5%


                                                        1.6%

                                                 0.8%



1994          1996          1998          2000          2002          2004

 12    UCSB Economic Forecast Project
 Real Consumption Expenditures Growth
 United States
                            5.0% 5.1%
                                        4.7%

3.7%                 3.8%                                           3.8% 3.7%
              3.4%                                           3.3%
                                                      3.1%
       2.7%                                    2.5%




1994          1996          1998        2000          2002          2004

 13    UCSB Economic Forecast Project
 Real Consumption Expenditures per Capita
 Growth United States
                            3.8% 3.9%
                                        3.6%



2.5%                 2.5%                                           2.6% 2.5%
              2.2%                                           2.2%
                                                      2.1%

       1.5%                                    1.5%




1994          1996          1998        2000          2002          2004

 14    UCSB Economic Forecast Project
           How High Are Oil
               Prices?




15   UCSB Economic Forecast Project
             Oil Price Adjusted for Wealth

350

300

250
                                 In d ex ( 1 9 6 6 = 1 0 0 )
200

150

100

 50

     0
            70   75   80    85    90        95         00      05

16       UCSB Economic Forecast Project
         What About Interest
              Rates?




17   UCSB Economic Forecast Project
           Greenspan Says:




           “Its a conundrum.”



18   UCSB Economic Forecast Project
Federal Funds Rate
vs. U.S. Mortgage Rate
percent
25.0


20.0
                                             Federal Funds Rate
                                             U.S. Mortgage Rate
15.0


10.0


5.0


0.0
  1973    1977   1981   1985   1989   1993      1997     2001     2005

19     UCSB Economic Forecast Project
             What About
            Ben Bernanke?

20   UCSB Economic Forecast Project
             What About
             Hurricanes?




21   UCSB Economic Forecast Project
        What About the cost of
         the Global War On
              Terror?



22   UCSB Economic Forecast Project
            What About the
              Inflation?




23   UCSB Economic Forecast Project
 Money Supply Growth
 vs. U.S. Inflation Rate
12%

10%
             Money Supply Growth
             U.S. Inflation Rate
8%

6%

4%

2%

0%
 1991     1993    1995     1997    1999   2001   2003   2005

 24     UCSB Economic Forecast Project
            What About the
            Federal Deficit?




25   UCSB Economic Forecast Project
California’s Economy


26   UCSB Economic Forecast Project
            Bill Says:


           “California has been doing
            better than expected.”




27   UCSB Economic Forecast Project
  Total Employment
  California                                                         16,767,338
                                      16,034,117    16,165,042 16,459,850
                        15,203,700
13,953,867 14,303,517




1994   1995   1996   1997   1998   1999   2000   2001   2002   2003   2004   2005

  28    UCSB Economic Forecast Project
Job Growth
United States and California




              United States                 California




1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005


29    UCSB Economic Forecast Project
 Unemployment Rate
 California

8.6%
       7.9%
              7.3%
                     6.4%                               6.7% 6.8%
                            6.0%                                      6.2%
                                                                             5.6%
                                   5.3% 5.0% 5.4%




1994   1995   1996   1997   1998   1999   2000   2001   2002   2003   2004   2005

 30    UCSB Economic Forecast Project
 Real Gross State Product Growth
 California
                                 8.1%
                                        7.5%

                   5.8%
                                                                     4.6% 4.5%
                          4.2%
       3.6% 3.7%                                              3.4%
                                                       2.8%

1.2%


                                               -0.2%
1994        1996          1998          2000           2002          2004

 31    UCSB Economic Forecast Project
 Real Gross State Product per Capita Growth
 California
                                        7.2%
                                 6.4%


                   4.3%

       2.8% 2.7%                                                     3.0% 2.9%
                          2.5%
                                                              1.6%
                                                   0.9%
0.0%



                                               -1.8%

1994        1996          1998          2000           2002          2004

 32    UCSB Economic Forecast Project
          San Luis Obispo
              County



33   UCSB Economic Forecast Project
             Median Home Price
thousands
$ 500                                                $ 471,500


$ 400
                                                                     Slide from
                                                                   November 2001
$ 300



$ 200



$ 100       95   96   97   98   99   00   01   02   03   04   05



34      UCSB Economic Forecast Project
 Nominal Median Home Price
 San Luis Obispo County
                                                                          $747,000
                                                                    $672,700
                                                               $604,400
                                                         $538,700

                                                    $443,100
                                              $381,800

                                 $282,200
                    $208,300
$169,900




1994       1996   1998         2000         2002      2004       2006          2008

 35    UCSB Economic Forecast Project
 Real Median Home Price Growth
 San Luis Obispo County

                                                                             16.6%
                                          15.4%
                                                                 13.9%
                                      12.5%                 12.7%     12.3%
                                                     9.9%
                                                                                     8.7% 8.0% 8.0%
                       6.2%


                0.2%
                              -0.5%

        -5.6%
-8.2%
1994            1996          1998            2000          2002      2004           2006      2008


 36      UCSB Economic Forecast Project
      Why Do Home Prices Keep
             Going Up?
                    An aside

                Coastal California is not
                 a local market
                Demographics
                Wealth accumulation
                Interest rates
                Taxes
                Supply

37   UCSB Economic Forecast Project
            First Time Home Buyer?

     180

     160

     140

     120
     100

      80

      60

      40

      20

       0
           First time home buyer   Not first time

38     UCSB Economic Forecast Project
         Why buy this particular house?

90
80
70
60
50
40
30
20
10
 0
      Better      Better     Cheaper         Job         Not      Retirement
     Amenities   Schools   Living Costs   Relocation   Answered

39   UCSB Economic Forecast Project
              Where are you coming from?
                             37.5 % came from
120                          outside the Tri-Counties

100     30.8 % were not                                44.7 % came from
                                                       outside the County
        primary residence
 80

 60

 40

 20

  0
      Santa Barbara or Ventura    San Luis Obispo County     Outside Tri-Counties
               County

40    UCSB Economic Forecast Project
            Bill Says:


            “Back to the forecast.”




41   UCSB Economic Forecast Project
Unemployment Rate
San Luis Obispo County
7.2%
       6.6%

              5.7%
                     4.8%
                                                      4.5% 4.6% 4.4%
                            4.2%          4.0% 3.9%                    4.0% 3.9% 3.8%
                                                                                      3.7%
                                   3.3%




1994          1996          1998          2000        2002     2004         2006     2008

42      UCSB Economic Forecast Project
 Nominal Gross County Product
 San Luis Obispo County
                                                                                                    13.17
 $ billions                                                                                 12.39
                                                                                    11.67
                                                                            10.99
                                                                    10.30
                                                        9.31 9.67
                                                 8.77
                                          7.90
                                   7.27
                            6.78
                     6.17
              5.59
4.95 5.17




1994          1996          1998          2000          2002        2004            2006            2008

 43    UCSB Economic Forecast Project
Real Gross County Product Growth
San Luis Obispo County
                     8.3%
                            8.0%
                                               7.2%
                                   6.5% 6.6%
              5.8%
4.9%


                                                                           3.3%
       2.6%                                                         2.9%          2.7% 2.7% 2.7%
                                                      2.6%



                                                             0.4%

1994          1996          1998       2000           2002          2004          2006     2008

44      UCSB Economic Forecast Project
 Real GCP per Capita Growth
 San Luis Obispo County
                     6.8%
                            6.3%
                                                 5.8%
                                   5.2%
              4.7%

3.8%
                                          3.4%

                                                                          2.2%
       1.8%                                                        1.8%
                                                        1.3%                     1.1% 1.1% 1.1%



                                                               -0.4%
1994          1996          1998          2000          2002       2004          2006     2008

 45     UCSB Economic Forecast Project
Real GCP per Worker Growth
San Luis Obispo County

                                        3.7%

                          3.2%
            2.9%
                                               2.6%
                                 2.4%
                                                                    2.1%
                   1.7%                                      1.7%
                                                                           1.5%
                                                      1.3%                        1.2%
                                                                                         0.8% 0.9%


0.1% 0.0%

1994        1996          1998          2000          2002          2004          2006       2008


46     UCSB Economic Forecast Project
Wage and Salary Employment Growth
San Luis Obispo County and California

                     5.1%
4.2%                        4.4% 4.4% 4.4%
              3.6%
                                             3.2%
       3.0%

                                                                          1.4% 1.4% 1.7% 1.7%
                                                                   1.1%
                                                    0.8%


                San Luis Obispo County
                                                           -0.9%
               California

1994          1996          1998     2000           2002           2004        2006     2008

47      UCSB Economic Forecast Project
Real Retail Sales per Capita Growth
San Luis Obispo County
                                   8.7%




              5.6%                        5.5%

                     4.4%                                      4.3%
       3.5%                 3.3%                                      3.3%
                                                 2.8%                        2.6% 2.7%
                                                                                         1.9% 2.0%
1.6%
                                                        1.2%



1994          1996          1998          2000          2002          2004        2006       2008

48      UCSB Economic Forecast Project
 Real Total Sales Growth
 San Luis Obispo County
                                   11.0%


                                           9.0%

                     7.2%                                            7.1%
              6.4%

                                                                                   5.1%
       4.4%
                                                                            4.0%
3.6%                        3.6%                                                          3.5% 3.5%

                                                  1.9% 1.7%

                                                              0.1%

1994          1996          1998           2000        2002          2004          2006        2008

 49      UCSB Economic Forecast Project
 Hotel / Motel Occupancy Rate
 San Luis Obispo County
                                    68.5%
                                         67.6%

                                66.1%
                                               65.7%
                                                                            64.5%
                 64.2%                                                 64.0%     64.3%
                                                             63.1%
                     63.0%                              62.9%     63.2%
          61.8%
     61.2%
60.6%




1994      1996           1998           2000     2002        2004      2006      2008

 50    UCSB Economic Forecast Project
 Hotel / Motel Room Rate
 San Luis Obispo County
                                                                                   $107.54
                                                                             $103.06
                                                                        $99.62
                                                                  $96.29
                                                            $91.89
                                                $85.48$88.37
                                          $81.97
                              $73.98$76.68
                  $67.74$69.77
            $63.11
$60.01$61.83




1994        1996        1998        2000       2002        2004        2006        2008

 51     UCSB Economic Forecast Project
 Housing Unit Permits per 1,000 people
 San Luis Obispo County
                    21.7


             17.1

                       14.2
                                  12.4
10.2
                                                                                                             8.8 8.2
                                                                                                   8.1 7.6
       7.2                               6.8                                         7.3 7.0                           7.3
                                                                                             6.6
                                               4.6               4.6 4.3   5.1 5.7
                                                           3.8
                                                     3.0



1981         1983   1985   1987   1989         1991        1993     1995      1997      1999       2001      2003      2005

 52           UCSB Economic Forecast Project
 2005 Housing Unit Permits per 1,000 people
 for Cities in San Luis Obispo County
                                      15.2




           7.6                                                       7.3
  5.6                                          5.3

                     2.6      2.9
                                                          1.3


Arroyo    Atasca-   Grover   Morro    Paso    Pismo    San Luis      SLO
Grande    dero       Beach    Bay    Robles   Beach   Obispo City   County

 53      UCSB Economic Forecast Project
            Bob Dylan says:


            “The times they are a changing.”




54   UCSB Economic Forecast Project
 Natural Increase vs. Net Migration
 San Luis Obispo County
people
4,500
4,000
3,500
3,000
2,500
2,000
1,500
1,000
 500
   0
         1994   1995   1996   1997    1998   1999    2000   2001   2002    2003   2004   2005
                                     Net Migration      Natural Increase

 55      UCSB Economic Forecast Project
Domestic Migration vs. Foreign Immigration
San Luis Obispo County
people
3,500

3,000

2,500

2,000

1,500

1,000

 500

   0
         1994   1995   1996   1997   1998   1999   2000   2001   2002   2003    2004
                              Domestic Migration          Foreign Immigration

56       UCSB Economic Forecast Project
2005 Population Growth
for Regions in San Luis Obispo County
                                       2.8%




                                                                    1.0%
                                                          0.8%




                     -0.2%    -0.1%
-0.2%      -0.3%
                                                -0.8%

Arroyo     Atasca-   Grover    Morro    Paso    Pismo    San Luis    SLO
Grande      dero     Beach     Bay     Robles   Beach   Obispo City County


57       UCSB Economic Forecast Project
         What Is Going On
              Here?


58   UCSB Economic Forecast Project
 Immediate Impacts
 Of High Home Prices
    Wage demands
        Skilled
        Unskilled
    Young Families
        Skilled
        Unskilled
    Retirees
        In migration
        Out migration
59   UCSB Economic Forecast Project
 Induced Impacts
 Of High Home Prices
    Firms
        Tradable Goods
        Non-Tradable Goods
    Demand For Services
    Opportunity
        Skilled Workers
        Unskilled Workers


60   UCSB Economic Forecast Project
 On Net
    The Population Declines
    The Population Becomes Bimodal
    Tradable Goods Production Exits
    Services Jobs Undetermined
    Retail Jobs Undetermined



61   UCSB Economic Forecast Project
 On Net
    Increased Housing Density
    Young Middle-Class Families Decline
    Increased In-Commuting
    Low-Income Families Undetermined
    School Aged Children Decline



62   UCSB Economic Forecast Project
  Change of Income Distribution From 2000 to 2005
        US and San Luis Obispo County
percent
 5.00

 4.00
             San Luis Obispo County
 3.00
             United States
 2.00

 1.00

 0.00

 -1.00

 -2.00

 -3.00
          $0-     $15,000- $25,000- $35,000- $50,000- $75,000- $100,000- $150,000
          $15,000 $24,999 $34,999 $49,999 $74,999 $99,999 $149,999 -up

  63      UCSB Economic Forecast Project
    Change in Age Distribution From 2000 to 2005
          US and San Luis Obispo County
percent
2.00
                      San Luis Obispo County
1.50
                      United States
1.00
0.50
0.00
-0.50
-1.00
-1.50
-2.00
-2.50
          0-4         10-14           18-20           25-34           45-49           55-59           65-74           85-up
                5-9           15-17           21-24           35-44           50-54           60-64           75-84

 64       UCSB Economic Forecast Project
 Employment Distribution (jobs)
 San Luis Obispo County - 2005
                    Agriculture          4,048
                         Mining    870
                   Construction              7,252
        Durable Manufacturing            3,539
   Non-Durable Manufacturing         2,794
Trans., Warehousing & Utilities          3,735
                    Information    1,496
               Wholesale Trade      2,396
                   Retail Trade                      13,775
      Finance, Ins.& Real Estate          4,740
                 Other Services                                        38,865
                   Government                                 21,678

 65      UCSB Economic Forecast Project
 5-Year Job Growth by Industry
 San Luis Obispo County - 2005
                    Agriculture   -15.2%
                        Mining                                     18.6%
                  Construction                                     18.6%
        Durable Manufacturing     -15.1%
   Non-Durable Manufacturing        -12.5%
Trans., Warehousing & Utilities                                    18.6%
                   Information -18.8%
               Wholesale Trade                       1.6%
                   Retail Trade                             9.2%
     Finance, Ins.& Real Estate                                            27.0%
                 Other Services                               12.2%
                   Government                -3.2%

66     UCSB Economic Forecast Project
              Thank you.

               Visit us at

           www.ucsb-efp.com


67   UCSB Economic Forecast Project

				
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