A sentence was notably missing from Alan Gin’s economic index today. That was the sentence where Gin usually says he still thinks the region will avoid a recession.
This is a big deal. Gin’s index is one of the widest-watched measures of the local economy. In a couple of speeches and panels earlier this year, Gin found his no-recession position at odds with the gloomier forecasts of some of his economist peers.
But the index today, for May, was decidedly grim. May was also the eighth straight month where the index declined “significantly,” and the 25th month of the past 26 where there were declines at all, according to Gin.
In Gin’s words:
Employment growth for 2008 as a whole through May is now just barely positive with a gain of only 400 jobs compared to the same period in 2007. Barring a huge surge in jobs in June, employment growth for 2008 as a whole will probably turn negative when the next employment report is released. How long the job losses continue and how deep they will be is uncertain at this point.
That’s the point in the index where Gin usually has the “but…” and then a statement of how the San Diego region would avoid recession.
But after such a bleak outlook, that nuance was missing today.
Here were Gin’s words from a chat I had with him in February:
“At the national level a recession is a decline in the economy either measured by GDP dropping for a couple of quarters, or massive job losses,” he said. “I don’t think we’ll see either here in San Diego.”
For one thing, he said, it’s tough to get data on the gross regional product — what would be the San Diego-equivalent to the GDP, because its data only comes out once a year. Still, Gin says he doesn’t think year-over-year drops in that measure are in store. Instead, he’s projected growth, albeit very slow growth — maybe 5,000 to 8,000 jobs this year.
I caught Gin on the phone a few minutes ago to ask if he’s changed his tune.
It’s true, he said: San Diego has now seen those year-over-year drops that Gin wasn’t expecting. He said he’ll be watching June numbers very carefully, but for now it looks like all told, the numbers for January to June job growth will prove lower than the numbers for the same six months in 2007.
Those six months of negative job growth compared to the same six months the year before is a locally-adjusted definition of recession, he said.
He said the numbers have deteriorated much more rapidly than he expected in the sectors tied to real estate, including the retail jobs in furniture and home decor sales.
“It looks like in the first half of 2008, the falloff in job growth is just much more rapid than before.”