County's Double-Digit Unemployment Expected For Next Two Years

Riverside County's economy is improving, but at a grudgingly slow pace influenced by state and national conditions, with double-digit unemployment projected to continue for the next two years, economists told the Board of Supervisors today.

"This recovery is quite a wimpy one," Cal State Fullerton economist Mira Farka told the board at the outset of a regional economic forecast prepared for the county Executive Office. "Our economy will grow, but it will grow in the shade, neither spectacular or dramatic."

Farka, who drew up the forecast with colleague Adrian Fleissig, said the national economy has regained some traction since the "Great Recession" of 2008-10. But the positive momentum is modest, at best, and will not immediately translate to an economic rebound for the local area, she said.

According to Farka, a majority of the jobs being added nationally and locally are "sub-par," in low-paying industries, including hospitality and retail. A large number of discouraged workers are choosing to stay out of the workforce with so few good-paying opportunities available, the professor said.

She said taking that factor into account, the national unemployment figure is actually above 11 percent, rather than the 8.2 percent reported by the government, and the county unemployment rate is closer to 17 percent, as opposed to the reported 12.8 percent.

Farka and Fleissig predicted Riverside County's employment base would expand gradually, with the jobless rate dropping to around 10 percent in late 2014, and thereafter going into the single digits.

The county's property tax revenue will stay flat through 2014, but begin to creep up in 2015 and beyond as the number of foreclosed properties on the market declines, according to the economists.

Farka said any number of "what-ifs" could derail economic growth. She cited an oil shock caused by a Middle East war and a lack of fiscal reform at the federal level as negatives for the nation as a whole. She questioned what might happen if the Bush tax cuts are not renewed at the end of December, when they're set to expire.

In a separate presentation, economist Chris Thornberg, co-founder of Los Angeles-based Beacon Economics, voiced optimism about the prospects for economic growth regionally, saying that a raft of affordable housing and lack of available space for business expansion along the coast make Riverside County attractive.

"If you're looking for growth in Southern California, this is the place to be," Thornberg told the board. "The Inland Empire is not going to go stagnant."

He predicted unemployment below 10 percent by the end of 2013 and said home prices should continue to slowly but steadily appreciate, pushing property tax receipts up 5.5 percent in 2014 compared to their current level.

Thornberg does not see any inflationary threat in the near-term, despite the nation's indebtedness now exceeding its annual growth domestic product. He also dismissed the possibility of high energy prices cratering the economy.

"Unless oil prices hit $180 per barrel, it's not a problem," the economist said.

He cited the state's regulatory environment as a "problem," but did not believe that would lead to an exodus of businesses in the years ahead.

"California is a paradise," he said.