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San Diego's Goldilocks recovery confirmed in recently released (and revised) estimates of metropolitan

San Diego economy exceeds $200 billion for first time in 2014


Monday, November 3, 2014

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     With the newly released estimates and revisions of GDP, San Diego’s economy has fully recovered from the “Great Recession”. GDP is the most comprehensive measure of economic activity. Newly instituted methodology of measuring GDP shows considerable increases from previous estimates. (The new methodology includes significant revisions that recognize R&D expenditures, entertainment, literary, and other artistic property as capital, and improves on accrual accounting of defined benefit pension plans. The methodology revision resulted in 5-7 percent increases in San Diego’s annual GDP estimates over the 2001-12 time period.)
     Despite San Diego showing overall record levels of economic activity, many sectors remain far from recovery. According to BEA figures, information, construction, food services, accommodations, and retail trade have still not recovered. On the other hand, local sectors that have more than recovered and set record levels of activity include professional and business services, real estate and leasing, and health care.
     Government and manufacturing sectors in San Diego continually expanded throughout the recession, and only faltered in 2013. The continual growth of these two sectors is largely attributed to large expansion of military and defense expenditures over the past decade. The decrease in the past year resulted from government budget and “sequestration” cuts particularly impacting San Diego.
     “These numbers underscore important changes ongoing in San Diego below the surface,” says Kelly Cunningham, National University System Institute for Policy Research economist. “The region continues to transform from largely defense and goods based production to more services and technology oriented applications for economic activity.”
     San Diego’s recent economic performance is also decidedly “middle-of-the-road”. San Diego’s 1.7 percent “real” growth in 2013 exactly equaled the average for all 381 metropolitan areas across the nation measured by the BEA.
     Among metro areas of similar size, whereas San Diego GDP fully recovered and moved to higher levels, several metro areas such as Atlanta and Phoenix, despite growth in more recent years, had still not quite reached pre-recession highs. Several additional areas, including Miami, Detroit, Riverside-San Bernardino, and Las Vegas remain far below former levels. On the other hand, similarly sized metro areas such as Seattle, San Jose (recently surpassing San Diego), Portland, and Denver all quickly recovered and expanded far beyond pre-recession levels of their economic activity.
     San Diego’s post-recession recovery appears relatively stable by comparison, not as robust as some similarly sized metro areas, but certainly much stronger than others. Perhaps we can label it a “Goldilocks” recovery for San Diego – not too hot and not too cold.