FAIRFIELD — “The Global and Local Economy in 2015 and Beyond” was the topic of the keynote presentation at Impact Solano on Nov. 21.
Robert Eyler, Ph.D., economics professor and director of the Center for Regional Economic Analysis at Sonoma State University, will provide a macro view of economic issues around the globe, in California and Solano County, at the close of 2014. He also offered his personal perspectives on things to watch in the year ahead.
Beginning with a worldwide recap of 2014, Dr. Eyler commented on the pace of Chinese, European and Japanese economies and how they could impact the U.S. and international trade. The status of financial markets and potential actions of the Federal Reserve will also be discussed.
Given a list of global concerns, combined with the continuing California drought, Dr. Eyler also addressed how these factors may affect real estate markets here at home.
“We live in an international community where the actions of one nation can ripple around the world in a matter of seconds influencing changes in investment strategies, net exports, consumption patterns and government spending,” Dr. Eyler said.
He provided an overview of how these economic drivers affected U.S. gross domestic product (GDP) growth — in terms of 2005 dollars — from 2007 to the present.
The past 24-year history of residential and nonresidential investment in the U.S. — from the first quarter of 1990 through the third quarter of this year — will be reviewed, as both categories continue to move into positive territory.
“The increase in excess reserves at U.S. depository institutions, representing loanable funds not lent, has risen steadily since 2008 to an all-time high,” Dr. Eyler said. “While this has contributed to holding inflation in check, it has not made funds available to those seeking loans that can help fuel the economy and stimulate growth.”
Putting his observations into context, Dr. Eyler provided an interpretation of how these conditions affect the continuing momentum of the American economy heading into 2015, along with concerns over inflation and job growth.
He also commented on how European economic conditions could place a damper on domestic interest rate hikes, at a time when the American economy still has years to expand.
Closer to home, Dr. Eyler focused on California’s growth potential and regional differences between coastal areas and valleys.
His presentation touched on how Bay Area economic activity has influenced state-level tax revenues, along with the possibility of structural changes, the potential impact of a stock market correction, as well as how current and expected changes in the tax environment could alter business dynamics.
A review of Solano County in 2014 also was included, with emphasis on job gains and losses by industry sectors. There was an assessment of the county’s GDP and unemployment rate, followed by a comparison of GDP sectors such as government, farms and construction from 2002 through 2013.
The housing market and home prices in Solano are part of Dr. Eyler’s regional review, as well as housing price growth from 2012 to 2014.
Turning to the social side, Dr. Eyler discussed “living wage” movements as a result of recent election decisions in Oakland and San Francisco. He also addressed opportunity costs of growth, such as traffic, homelessness, underemployment, long-duration unemployment, plus land-use constraints on growth.
“The takeaway from this presentation will include things to watch in 2015 that could impact our economic foundations,” he said. “Things like global growth and geopolitics, interest rates, the supply side of our economy, drought issues and support for local farmers, as well as long-term attempts to fix short-term issues.”