If you’re a business owner, one of your main focuses is always steered toward what is happening in the economy. Whether it’s on a national, regional, or local level, the economy will have an impact on your business and your employees. Here are five signs the economic forecast in SoCal is bright.
1. Growth in Numbers
In 2018, the U.S. economy grew 2.9% (slightly up from 2017 and 2016). The greatest contributions of this growth came from government and business investment. Despite trade disputes, exports also saw a good year. The consumer savings rate was above 6% as disposable income used for debt fell to a record low. Wages are rising and consumer spending remains solid.
2. Mean Credit Scores are Up
Today, the mean credit score of a borrower is above 750, compared to below 700 in 2006 when mortgage debt was expanding by 15% a year. Borrowers are also spending less of their income on housing (29%) than they were (37%) when they had lower credit scores.
3. California Unemployment Rate is Low
The statewide unemployment rate was 4.2% in January 2019, which was slightly above the all-time low of 4.1%. Unemployment rates in the Inland Empire and Los Angeles were up a tick from the national level at 4.3% and 4.6% respectively. Meanwhile, the unemployment rate in Orange County was at a low 3.0%. Despite labor forces also increasing across the Southland, the labor market remains taut leaving job seekers with a plethora of options in their search.
4. Venture Capital is Heating up in San Diego
San Diego is one of the top regions for healthcare innovation, particularly in the Medical Device and Biotechnology sectors which has made the region an attractive choice for venture capital investment. In 2018, San Diego County received a record $2.96B in investments. This is not only the trend in San Diego, but also across the country as venture capitalists are spending more money per deal. As San Diego remains one of the top regions for healthcare innovation, this trend is forecasted to continue.
5. Commercial Real Estate Market Remains Strong
The commercial real estate market remains strong throughout Southern California. Commercial rents have increased year-over-year but construction has also kept those same rents from increasing too much. The region is still seen as affordable. As of the fourth quarter of 2018, office rents in the Inland Empire are the lowest amongst neighboring regions at $22.93 per square foot with a vacancy rate of 16.8%. In Orange County, the rate is higher ($34.12) however vacancies remain lower (15.9%). Prices are slightly lower in San Diego ($32.79) along with the vacancy rate (15.7%). In Los Angeles, the rates are the highest ($38.91), however, the vacancy rates are the lowest (14.5%).
If your business requires a banking resource that goes well beyond what’s expected, we’d like to hear from you. Every bank has business accounts. Ours come with accountability. Our commitment to you is based on more than just numbers. At Torrey Pines Bank, we’re invested in your business as much as you are. In addition to commercial real estate solutions, Torrey Pines Bank offers a full suite of services tailored specifically to Southern California businesses.
As a division of Western Alliance Bank, Member FDIC, Torrey Pines Bank clients benefit from the financial strength, capacity and sophisticated product offerings of a large bank along with the flexibility, deep regional knowledge and local leadership of a more specialized financial institution. For the fourth year in a row, Western Alliance ranks in the Top 10 on the Forbes 2019 “Best Banks in America” list, which lists the nation’s top 100 banks based on 10 important metrics related to growth, profitability, capital adequacy and asset quality.
For more information, visit torreypinesbank.com.
Source: 2019 Regional Intelligence Report, May 2019, prepared by Beacon Economics, LLC, presented by Torrey Pines Bank.