Robert E. Lee: (1) It’s tough to get a read on housing starts and sales at this point. Right now, we’re on a pace to have less than 9,000 residential units authorized by building permits, which is related to housing starts. This is about half of what we have been building in recent years, and it would be the worst number since the recession impacted the housing market in the 1990s. I would expect that we’ll see similar numbers in 2008 (about 8,000 units authorized). Sales will continue to be weak, but I see a possible bottom in the middle of 2008, although I don’t think we’ll have a rebound until 2009.

(2) I think it would be difficult for San Diego to have an “official” recession, by that meaning a decrease in the number of jobs we have in the county. In the last 30 years, there have been only four years where jobs have declined from the year before, and three of those four were in the early 1990s. Because we have few of the traditional “smokestack” industries (e.g., auto production, steel) and because we don’t have a lot of corporate headquarters with layers of middle management to cut, we’re less likely to be affected by the mass layoffs that occur during economic downturns. Plus we have the military pumping in huge amounts of money for personnel, defense manufacturing, and retirement, regardless of the business cycle. A San Diego version of a recession would be slower job growth, not a decline.


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