Forecasting the Future - Keegan & Coppin Company, Inc. · Forecasting the Future Marin...

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Forecasting the FutureMarin County’s Economy to 2020:

What Can We See Well?

San Rafael, CA January 29, 2019

Robert Eyler, PhDChief Economist, Marin Economic Forum

eyler@marineconomicforum.org

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

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National/Global Themes

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Source: Google Images

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What do the professionals say?

Source: Philadelphia Federal Reserve Branch

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Equity Markets: S&P 500 (Monthly Index)

Shaded dates = recession, Jan 2009 – Jan 15, 2019

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Equity Markets: S&P 500 (Weekly Index),

2018 in Review

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Equity Markets: S&P 500 (Weekly Index),

2015 in contrast

8Prices: FED Watching

10 yr - 3 Month Spread and Federal Funds Rate,

Jan 1985 to October 2018, % Weekly Avg

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

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California and North Bay Thinking Fires, Housing, Labor

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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

-14.0%

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CA SF Oak SJ Marin

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Non-Farm 12-month % Change, Seasonally Adjusted

Marin County and California, 2001 - Sept 2018

Source: California EDD

$19.20

$23.81

$30.42

$38.27

$44.55

$27.29 $27.85

$-

$5.00

$10.00

$15.00

$20.00

$25.00

$30.00

$35.00

$40.00

$45.00

$50.00

10 25 50 75 90

Percent of Workers

Marin County Sonoma County Napa County

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Comparative Wage Distributions, North Bay, 2018,

Current Dollars

Source: Bureau of Labor Statistics

$1,134,700

$623,100

$890,448

$0

$200,000

$400,000

$600,000

$800,000

$1,000,000

$1,200,000

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-04

Marin County, Median Home Prices, 2009 $

Current Value Real (2009$)

Housing Prices, Marin CountyCurrent and 2009 Dollars, April 1996 – Sept 2018

14Source: Zillow Research

$962,900

0%

20%

40%

60%

80%

100%

120%

140%

160%

180%

200%

2011 2015 2018

Comparative Rents, Bay Area, 2011, 2015 and 2018, % of Sonoma County

15Source: Zillow Research

$4,400

Zillow Forecast by County, 2019, % Growth Median Home Price (solid line = CA +7.7%)

16Source: Zillow Research

6.6%

-4.0%

-2.0%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

18.0%

5.96%

-28.57%

6.88%

-40.0% -30.0% -20.0% -10.0% 0.0% 10.0% 20.0% 30.0% 40.0%

Total Wage and Salary

Farm

Construction

Manu

Trans-Util

Wholesale and Retail

Finance

Prof Serv

Info

Health and Ed

Leisure

Government

California Marin County

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Marin County Jobs, 2018-2027, % Growth

Source: CA Economic Forecast/CalTrans

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

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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

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Questions?

Thanks!

eyler@marineconomicforum.org@bobby7007

www.marineconomicforum.org