Strong economic growth forecast into 2018
“We are in a golden era in the economy,” and economic growth should continue for at least the next year.
That was one of the key points economist Mark Schniepp made to about 300 attendees of the 2017 Economic Outlook Conference at the Hyatt Regency Valencia on Thursday. The annual conference is held by the Santa Clarita Valley Economic Development Corp. and College of the Canyons.
“Trumponomics means more growth in 2017 and 2018,” said Schniepp, director of California Economic Forecast, a consulting and analytic firm in Santa Barbara that focuses on the Golden State. “For now, we are at full employment status.”
Trumponomics includes bold economic promises to cut personal and corporate taxes, restructure trade deals, and introduce large fiscal stimulus measures focused on infrastructure, defense, and homeland security, he said.
Schniepp and another speaker, Mark Vitner, managing director and senior economist with Wells Fargo, each cited a report from the Conference Board released this week showing a sharper than anticipated rise in consumer confidence in March, to its highest point since 2000.
In the Santa Clarita Valley, Schniepp expects the highest job growth to come in high-paying professional, technical and science sectors. This includes law and accounting firms, makers of medical devices, bionics and advanced manufacturing.
“Job creation continues to be a little faster here than other places because in Santa Clarita, unlike other parts of Los Angeles County, there’s still land for growth,” Schniepp said.
That growth includes Needham Ranch, the largest commercial project under development in Los Angeles County. Needham Ranch is a 145-acre development with 4.2 million square feet of office, industrial and retail space.
Tourism and hospitality, driven by Six Flags Magic Mountain, is another growing source of jobs, but these are more likely to be at below-average salaries.
One potential drag on SCV’s growth is a shortage of housing.
Santa Clarita is the tightest real estate market in Los Angeles County, he said, with the county’s lowest vacancy rates for apartments, commercial space and industrial space.
There is little risk of recession this year, Vitner said, and inflation should not be a problem. He expects the inflation rate to stay within a half percentage point of the two-percent target rate set by the Federal Reserve.
A trade war is unlikely, and Vitner said he wouldn’t be surprised if the Trans Pacific Partnership, embraced by the Obama White House but rejected by President Trump, survives in some form.
Growing use of autonomous vehicles will be a major trend, according to Todd Bauer, a partner in the Los Angeles office of consulting firm Deloitte.
Self-driving cars could account for more than half of all vehicles within 25 years, he said. As that shift happens, it will mean fewer jobs for commercial drivers of trucks, taxis, and shared services like Uber and Lyft.
And as more people share cars, demand for parking will decrease. This could mean that land now used for parking lots could become available for parks or mixed-use developments and that new uses may need to be found for parking structures.