National economic trends forecast a mild recession in late 2023; Transition to decarbonized economy is an opportunity in San Diego County
The San Diego North Economic Development Council (SDNEDC) hosted its 10th Annual North County Economic Summit on Thursday at California State University, San Marcos. The event brought together about 400 North County industry leaders, policymakers, and experts to discuss the latest national economic trends and projections.
Mild Recession on the Horizon
Keynote speaker Charles Dougherty, Vice President and Senior Economist at Wells Fargo Corporate and Investment Bank, presented his insights on the current state of the national economy and his forecasts for the coming months. His analysis included the forecast of a mild recession later this year and possibly into the first quarter of 2024. He further emphasized the challenges associated with achieving the Federal Reserve’s target inflation rate of 2% and the implications of a modest uptick in unemployment rate as the recession unfolds.
“When everyone hears the term ‘recession,’ the little hairs on the back of their neck go up, and understandably, because we’ve just been through some of the biggest recessions,” said Dougherty. However, in comparison to the declines of 2008 (4%) and 2020 (10%), the predicted 2023-24 recession will likely only reach just over a 1% decline, according to Dougherty.
“We have some turbulence ahead of us, but if you’re going to go into a downturn, you want to go into it with a relative position of strength,” said Dougherty, expressing his belief that the nation is currently in such a position.
Inflation and Interest Rates
In the past recent years, people have built up a “stockpile of savings,” both naturally (from not being able to go out during the pandemic) and from physical stimulus in the form of the Child Tax Credit, COVID stimulus checks, etc. Businesses have been profitable, and home values have increased, building equity. As a result, consumers possess a smaller income-to-debt ratio, which is still driving consumer spending.
“Inflation is the highest it’s been in the last 40 years, and consumers aren’t happy about it, but they are still going out and spending,” said Dougherty.
Dougherty believes we are at the peak of the Federal Fund’s interest rate target range, but they are not likely to lower interest rates back down anytime soon. Owing to previous experience of back-to-back recessions when interest rates were lowered too quickly, Dougherty said the Federal Government will likely hold this rate for the remainder of this year.
The Federal Response
“There’s only one way the Fed knows to get inflation to slow down, which is to slow down the economy,” said Dougherty. Until the target inflation rate reaches and holds at 2%, “the Feds will keep interest rates strong even if we see a negative number on the GDP growth. But once they start (lowering the interest rates), they will go down pretty quickly.”
“We live in a cyclical economy. We’re moving in the right direction, but it’s still too hot,” said Dougherty.
Transition to Decarbonized Economy
Josh Williams, President and Principal Researcher of BW Research, spoke next. He called the 400 guests in attendance “the movers and shakers of North County” and said the key word for this year is “transitions.”
“North County and San Diego County as a whole are experiencing things that are kind of ahead of the rest of the nation,” said Williams, including leading the effort toward renewable energy. He emphasized that North County should lead the shift to a decarbonized economy.
“We’re already at 59% renewable energy in California, but the last 40% is going to be tough. It’s really a 30-year plan,” said Williams. “New jobs will outnumber lost jobs by as much as 10 to 1 as we transition to a decarbonized economy.”
North County Indicators Report
Williams’ presentation at the North County Economic Summit included an overview of the North County Indicators report, which includes over 64 indicators and complimentary data sets designed to provide a holistic measure of North County’s economic ecosystem. He also outlined core changes, challenges, and opportunities in North County:
- the transition to a decarbonized economy;
- the incorporation of Artificial Intelligence and Machine Learning technologies;
- the decoupling of the global economy leading to evolving supply chains;
- the challenges in building the infrastructure and housing the region requires; and
- the creation of widely shared prosperity, assisting smaller “pockets of economic distress.”
North County’s Importance and Impact
North County represents one-third of the population and over 40% of the economy in San Diego County, according to Williams. Almost half of this population has obtained a bachelor’s degree or higher, adding to the long-term economic success of the region.
“California is the fourth largest economy in the world, on its own,” said Williams. He mused on the possibilities of what could be accomplished if we could just connect California better, which is exactly what economic development organizations like SDNEDC aim to do.
The 10th Annual North County Economic Summit marked a milestone for SDNEDC, showcasing its dedication to fostering economic growth, collaboration, and knowledge sharing within the region. The event received enthusiastic participation from a diverse range of industry leaders, policymakers, and professionals, solidifying its reputation as a premier platform for economic dialogue and exchange.
Couldn’t attend the event? See what you missed:
- Review the Speaker’s Slide Show
- Browse the digital North County Indicators report
- Watch Charles Dougherty’s Presentation (48:51)
- Watch Josh Williams’ Presentation (41:27)
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About the Author
Caitlyn Canby loves to discover and share people’s stories. She has her bachelor’s degree in Communications, Print Journalism with over 8 years of journalism experience. An Escondido native, she just moved back from Catalina Island to North County with her husband and two children to the town of Fallbrook. Caitlyn enjoys collaborating on projects as Marketing and Events Coordinator at SDNEDC, traveling, and exploring new restaurants, venues, experiences, and cultures.