San Diego’s economy seems to be doing far worse than everyone realized.

San Diego’s gross domestic product shows much weaker activity than formerly reported, according to newly released estimates of GDP by metropolitan area.

This chart compares the previous estimates of “real” change in GDP to the latest estimates:

Revised_SD_GDP_VOSD

The revisions indicate San Diego’s GDP growth between 2003 and 2005 was much higher than formerly reported, and the recession came sooner and significantly worse. The past few years also show much weaker growth than previously estimated.

The Commerce Department provides GDP estimates of the nation’s 382 metropolitan areas. GDP by metropolitan area is the sub-state counterpart to the nation’s GDP, the most comprehensive and featured measure of U.S. economic activity. GDP by metropolitan area is derived by the sum of GDP originating among all industries for each metro area.


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The current-dollar statistics are valued as the prices during the period when the transactions occurred, or at “market value,” also referred to as “nominal GDP” or “current-price GDP.” Real values are inflation-adjusted to exclude the effects of price changes.

SDGRP calc17_VOSD

 

SDGRPtable_VOSD

San Diego’s economy slowed from 3 percent growth in 2013 to only 0.4 percent by 2015 and 0.3 percent in 2016. Since 2014, San Diego’s economic growth significantly lags both California and the United States.

So far, in 2017 job growth locally has been slowing.

NonfarmJobsSA-US_VOSD

The slowdown suggests GDP growth in 2017 will also further decrease. Our estimate of 0.2 percent for San Diego nearly falls to negative, which would indicate recession. Perhaps history repeating, San Diego may once again lead the rest of the state and nation into recession as it did 10 years ago.

This chart of per-capita real GDP reveals how poor San Diego’s recent economic performance has been in comparison with the rest of the nation, state and other major California metro areas. Only San Diego’s “real” per capita GDP has declined since 2013.

SDPerCapitaGDP17VOSD

San Diego’s per capita GDP fell behind California in 2016 for the first time in a long time, as well as below Los Angeles. Northern California (more precisely, the Bay Area) is outperforming Southern California by far.

San Diego’s sputtering economy may largely be due to the downsizing of the military. Active duty military personnel in San Diego peaked in modern times at 112,000 in 2009; as of 2015 – the latest year available – the number was 98,828, according to the Commerce Department.

The unreasonably high cost of housing is also driving people away. Constraints on businesses, such as high minimum wage and excessive regulations, may contribute to businesses and jobs going away as well.

The new report shows industry sectors declining in San Diego include nondurable-goods manufacturing, real estate, rentals and leasing, and professional and business services.

Kelly Cunningham is a senior economist in the National University System.

    This article relates to: Economy, Must Reads

    Written by Kelly Cunningham

    6 comments
    philip piel
    philip piel subscriber

    Look on the bright side, you now need a union card to work on tax payer funded SANDAG projects.

    john stump
    john stump subscriber

    @philip piel I have read your comments before and have been challenged trying to figure out your meanings.  Are you using sarcasm or do you believe that taxpayer funded work should be closed to all but union members?  

    philip piel
    philip piel subscriber

    @john stump @philip piel


    My comment is a poor effort at sarcasm, I find it odd that illegal aliens are encouraged to attend public schools yet citizens are kept from working on them unless they purchase a union card. 

    Molly Cook
    Molly Cook

    This information answers several questions about San Diego and its economics that have been puzzling.  The city needs a better model, something beyond bits and pieces or pet projects, to get itself righted and become the city it thinks it is.

    john stump
    john stump subscriber

    Sea level rise only comes after a near term climate change that has a very hotter and desert dry San Diego

    john stump
    john stump subscriber

    Thank you for a data driven article


    Our Military sector should improve with the planned increases to military personnel levels but it will never return to the cold war civilian industries levels.  The Kearny Mesa high tech military missile production jobs are not coming back!


    The real challenges lay with the loss of San Diego's Tourism / Hospitality competitive advantages.  We are no longer a twofer destination with Mexico.  San Diego is no longer a low cost resort city because of needed progressive living wages, the tripling or quadrupling water / sewer costs from PURE toilet to tap project costs, and the coming storm water clean up fees.


    The looming loss is our fabled Mediterranean climate for the more drought high temperature desert climate that Climate Change projects.  Why go to a high cost hot spot when Las Vegas offers more at lower costs?  Yes they had a crazed shooting incident but San Diego has diseased hepatitis and rampant poverty.


    The future also includes Global Warming regulations that may double jet aircraft travel costs.  Personally I would not recommend buying 40 year San Diego convention center or municipal bonds, given the city's terrible budgetary future and declining hospitality sector.


    The days of the 100 year old Panama Exhibition carnival based economy are over.  No longer can we bet our economic future on keeping a herd of old elephants downtown