San Diego Region Projected To Lose $12.4 Billion In 2020 Due To The Pandemic

Speaker 1: 00:00 The San Diego association of governments or SANDAG has tallied up the economic losses we've sustained in the first six months of the COVID pandemic. And the results are significant. The analysis finds that the San Diego region will be hit with an overall loss of more than $12 billion this year, a figure that not only wipes out an expected 2% increase in the gross regional product, but erases the region's economic gains for the past two years. Although the loss of business activity affects all of San Diego, the SANDAG analysis finds certain industries and workers have been hit. The hardest journey may is Ray major, chief economist at SANDAG and Ray. Welcome to the program. Speaker 2: 00:43 Thank you, Maureen. Thank you for having me. Speaker 1: 00:45 What kinds of business activity did SANDAG count to create this economic picture? Speaker 2: 00:51 Well, we took a look at all of the different sectors of the economy here in San Diego. And what we found is that there were some that were hit much harder than others with the COVID impact. And so we were looking at industries like the tourism industry and retail and education, just those three industries account for about 80% of the job loss in the region during this COVID, uh, lockdown. Speaker 1: 01:17 How many jobs have been lost here during the first six months of the pandemic? Speaker 2: 01:21 So we estimate that there's probably around 176,000 jobs that are lost or can be directly tied to losses due to COVID. And about 140,000 of those are in the three industries that I mentioned previously, Speaker 1: 01:37 I found that the hardest hit San Diego wins, where those making the lowest incomes to begin with. Tell us about that. Speaker 2: 01:43 Well, we, we had some early information that that was going to be a problem, but now we started to look deeper into the data. And what we saw is that there has been a recovery in a lot of industries. So, uh, in the industries that are primarily white collar, when you take a look at things like the innovation sector, you look at, uh, finance, insurance and real estate. Pretty much those jobs have come back and people are working remotely. So we see less than a percent difference, uh, in terms of employment now and at the beginning of the pandemic. But when you look at workers who earned less than $27,000 per year, so that's pretty much minimum wage employment. We see that the employment levels are still down by 23%. So that really points out to us that the hardest hit San Diego wins are those who are earning the least amount of money in the region. Speaker 1: 02:33 Any improvements in any of those sectors I've been hearing, for example, that more people are starting to take road trips, could tourism becoming bad. Speaker 2: 02:41 W we do see people taking road trips, and we do see tourism coming back a little bit in terms of people taking local vacations. So you would see people coming down from orange County or LA and staying in San Diego. But our tourism industry is such a large part of our overall Indus, uh, economy that it really has taken a hit because it relies so heavily on business tourism and the conventions that used to come to San Diego and would fill the hotels downtown and the convention center. And those people would go out to eat dinner in the Gaslamp district. And they would go and spend money in the San Diego economy that has pretty much dried up this year. And so that industry is still hit extremely hard. Although local tourism is coming back, people are starting to travel a little bit. Speaker 1: 03:31 And your analysis also suggests that some of the most effected industries like tourism, like retail might not come back to what we consider normal. Why not? Speaker 2: 03:40 Well, when you take a look at something like, like retail, there has been hyper adoption of internet shopping, for instance. So internet shopping, we were looking at double digit growth each year for the last couple of years, but all of a sudden, everybody started ordering things online and you, you see internet activity or shopping activity up by 200%. And when you see numbers like that, what happens is that you have consumer behavior changing. And so people are now much more comfortable buying things online and having them delivered to their door. There's a certain level of convenience there and safety. Quite frankly, you don't have to go out if, if you are concerned about COVID to purchase these things. And so brick and mortar stores were already suffering because of internet sales. But now we take a look at it and boy, they're going to have a real hard time given the adoption of internet sales in the last couple of months. Speaker 2: 04:33 In addition to that, you asked about the tourism industry and, you know, for the tourism industry, people have adopted this zoom technology and other ways of communicating than in person. And many of these business conferences that were held in person can now really be held online. And that's a phenomenon that did not occur before March. And now all of a sudden you can hold these conferences online and then you have to start thinking, will a business really send its people across the nation, pay for the airfare, pay for the hotel, the price of entrance into the convention to have their, their people go live when they can actually do it over some kind of zoom technology or computer technology. And I think we're going to see a change in business travel. I don't think that businesses are going to want to spend the money to send people plus until it's a hundred percent safe to travel. Many businesses are not going to want to put their employees in a risky situation where they would send them Speaker 1: 05:33 Negotiations are still going back and forth in Washington over a new stimulus package, could a new influx of cash from the government to help San Diego to shore up. Some of these economic losses, Speaker 2: 05:45 Absolutely cash infusion would help the local economy. Our estimates of the $12.4 billion that we lost in the region is actually better than it could have been had the government not, uh, infused two to $3 trillion into the, uh, national economy early on in the pandemic. So the, the money that is infused into the economy is spent on consumer goods purchases. For instance, some people pay their mortgages with it, and it really does keep the economy going. So these stimulus bills are necessary. As long as we are in a situation where businesses cannot return to full operations because of state regulations. Speaker 1: 06:30 I've been speaking with Ray major, chief economist at SANDAG and Ray. Thank you very much. Speaker 2: 06:35 You're welcome. Thank you very much.