Forecasting the Future Marin County s Economy to 2020: What Can We See Well? San Rafael, CA January 29, 2019

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1 Forecasting the Future Marin County s Economy to 2020: What Can We See Well? San Rafael, CA January 29, 2019 Robert Eyler, PhD Chief Economist, Marin Economic Forum eyler@marineconomicforum.org 1

2 Agenda National and State Overview: is recession coming soon? Slowdown likely for 2019 and 2020, recession before late 2020 unlikely Overview: Marin County and North Bay Fire rebuild and expansion of disaster Jobs and income growth continue Workforce and housing and commute concerns to continue 2

3 National/Global Themes Source: Google Images 3

4 What do the professionals say? Source: Philadelphia Federal Reserve Branch 4

5 Equity Markets: S&P 500 (Monthly Index) Shaded dates = recession, Jan 2009 Jan 15,

6 Equity Markets: S&P 500 (Weekly Index), 2018 in Review 6

7 Equity Markets: S&P 500 (Weekly Index), 2015 in contrast 7

8 Prices: FED Watching 8

9 10 yr - 3 Month Spread and Federal Funds Rate, Jan 1985 to October 2018, % Weekly Avg

10 So What? National/global: Low Interest rates: still pretty good historically Fiscal concerns and federal zaniness not a help Recession unlikely before 2020, maybe 2021 but, Likely a mild recession because of mild growth Slowdown versus actual contraction: close relatives Marin County affected by global markets with lag Housing and labor markets remain good foundationally Watch Bay Area major employers over next 18 months 10

11 California and North Bay Thinking Fires, Housing, Labor Fires affect supply for sure what about demand? Marin County probably, dubiously positively affected When insurance funding runs out, may be a short-run scramble in housing/labor in North Bay 11

12 Jan-01 Jul-01 Jan-02 Jul-02 Jan-03 Jul-03 Jan-04 Jul-04 Jan-05 Jul-05 Jan-06 Jul-06 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 Jul-16 Jan-17 Jul-17 Jan-18 Jul-18 Jan-19 Non-Farm 12-month % Change, Seasonally Adjusted Marin County and California, Sept % 6.0% 4.0% 2.0% 0.0% -2.0% -4.0% -6.0% -8.0% -10.0% -12.0% -14.0% CA SF Oak SJ Marin Source: California EDD 12

13 Comparative Wage Distributions, North Bay, 2018, Current Dollars $50.00 $45.00 $40.00 Marin County Sonoma County Napa County $38.27 $44.55 $35.00 $30.00 $25.00 $20.00 $15.00 $10.00 $5.00 $19.20 $23.81 $30.42 $27.29 $27.85 $ Percent of Workers Source: Bureau of Labor Statistics 13

14 Housing Prices, Marin County Current and 2009 Dollars, April 1996 Sept 2018 $1,200,000 $1,000,000 $800,000 $600,000 $400,000 $200,000 Marin County, Median Home Prices, 2009 $ Current Value Real (2009$) $962,900 $623,100 $1,134,700 $890,448 $0 14 Source: Zillow Research

15 Comparative Rents, Bay Area, 2011, 2015 and 2018, % of Sonoma County 200% 180% 160% 140% 120% 100% 80% 60% 40% 20% 0% $4, Source: Zillow Research 15

16 Zillow Forecast by County, 2019, % Growth Median Home Price (solid line = CA +7.7%) 18.0% 16.0% 14.0% 12.0% 10.0% 6.6% 8.0% 6.0% 4.0% 2.0% 0.0% -2.0% -4.0% Source: Zillow Research 16

17 Marin County Jobs, , % Growth California Marin County Government Leisure Health and Ed Info % Prof Serv Finance Wholesale and Retail Trans-Util Manu Construction Farm Total Wage and Salary 6.88% 5.96% Source: CA Economic Forecast/CalTrans -40.0% -30.0% -20.0% -10.0% 0.0% 10.0% 20.0% 30.0% 40.0% 17

18 Bottom Line More volatility coming in financial markets All positive cycles must end, but can be slower growth vs. contraction North Bay and Marin County to continue the struggle with wages, commuting and housing: all related Housing is a supply and demand game, don t get too deep Mid 2020s the real challenge coming, depends on longer work lives and the nature of work 18

19 What to Watch: Forecasting the Future Geopolitics and market reactions Interest rate watch Bay Area employment and quick cuts Home building in North Bay Marin County employers and wages Workforce Development and Business Retention and Expansion 19

20 Questions? 20

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