The San Diego North Economic Development Council (SDNEDC) hosted its 11th Annual North County Economic Summit on May 7 on the campus of California State University, San Marcos. The event brought together over 380 North County industry leaders, policymakers, and experts to discuss the latest national economic trends and projections.

Charles Dougherty, Executive Director and Senior Economist at Wells Fargo Corporate and Investment Bank, provided the audience with his insights on the current state of the national economy and his forecasts for the coming months. Although a soft landing now appears on the horizon, economic growth is set to slow in the second half of 2024.

While economic growth has been strong, some sectors are strained due to high interest rates – namely manufacturing, freight, and real estate. Service industries are thriving, as consumers have shifted from purchasing mainly goods during COVID-19 shutdowns to being able to leave the house and use services again.

Dougherty, Executive Director and Senior Economist at Wells Fargo Corporate and Investment Bank, provided the audience of 380 people with his insights on the current state of the national economy and his forecasts for the remainder of 2024.

Consumer Spending & Inflation

“The overall economy is still growing at a strong rate (around 3%) driven by strong consumer spending and a strong labor market,” Dougherty said. A marked increase in net wealth over the last 4 years (due to high stock market and home prices), also supports spending.

Since consumer spending accounts for two-thirds of the economy, strong spending usually equates to strong economic growth. However, auto and credit loan delinquency rates are increasing, signaling that while consumers continue to spend, they are having a harder time digesting the higher interest rates.

“Inflation has moderated and is now running slightly below income growth, which remains generally strong,” Dougherty said. The strong labor market also drives high consumer spending, but the labor market has started to downshift. April 2024 marked the first month since November 2023 to dip below 200,000 jobs added in the U.S.

While this may seem like a negative thing, balance in the labor market is one of the markers that the Federal Reserve looks for when determining the right time to drop interest rates. This is due to firms passing high employment costs on to the consumer, causing price pressures.

April 2024 marked the first month since November 2023 to dip below 200,000 jobs added in the U.S.

When Will Interest Rates Fall?

“The Fed will very likely start to cut interest rates this year, but it will be slow. In their view, there’s no rush,” Dougherty said. “While we saw an increase in early 2024, inflation still appears to be on the path back to 2 percent. It’s going to be a bumpy ride, but it’s on its way. We’ll see lower interest rates when the Fed has confidence that we’re on that path.”

Dougherty predicted that we may see slight interest rate drops in September, December, and throughout 2025.

“Last year, the consensus in economic circles was we’d need a recession to bring inflation down. It has come down from 9 percent to 3-4 percent, and all without a deterioration in economic growth,” Dougherty said.

Economic Panel on Job-to-Housing Balance

After the keynote, local economic experts Josh Williams, Founder of BW Research, and Gary London, Senior Principal of London Moeder Advisors, joined Dougherty to provide commentary specific to North County and answer questions from the audience. One of the hot topics of discussion was the balance between job growth and housing development, with approximately 9 jobs added for every 2 housing units added in North County over the last 10 years.

“Over the last 5 to 7 years, North County has done a good job balancing quality of life and quality of economic opportunity, but a continual challenge has been providing housing for the workers that we need,” Williams said.  “Innovation in decarbonization, AI, machine learning, and cybersecurity will be the drivers of the future. How do we find the balance to make sure that those companies can grow here while also protecting the quality of life in North County?”

“While we’ve had very strong prosperity in our region over the past few years, owing to a diversified economy, we lost a net of around 7,000 people in the last census. It’s unprecedented in this region,” London said. “The cost of housing remains stubbornly high and will remain so because we are not adding to the supply properly.”

The 2024 North County Indicators is the 11th iteration of this report that takes thorough look at the health of North County’s economy.

2024 North County Indicators Report

SDNEDC also released the 2024 North County Indicators (NCI) report at the event, which contains over 60 indicators and complementary data sets that provide key metrics to measure North County’s prosperity. To request a copy of the NCI report, please email Caitlyn at ccanby@sdnedc.org.

The North County Economic Summit is one part of the larger SDNEDC mission to help North County businesses expand and grow. By creating space to discuss the challenges and opportunities this region faces, SDNEDC hopes to foster economic growth, collaboration, and knowledge sharing within North County.

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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 Communications Manager at SDNEDC, traveling, and exploring new restaurants, venues, experiences, and cultures.