Sluggish Local Growth Predicted for 2012

San Diego's economy will grow by 1.8 percent next year, according to a forecast released by the National University System Institute for Policy Research.

The authors said the rate of growth, while the best in six years, is still sluggish. They estimated this year's increase in San Diego's gross domestic product to be 1.4 percent.

San Diego will gain 21,000 jobs in 2012, but the unemployment rate will fall only slightly to 9.8 percent, according to the report.

The numbers gain will still bring the region only a little more than halfway toward recovering jobs lost in the recession, the authors said.

The report stated that San Diegans are also being challenged by the types of jobs being created, either low-skilled, low-wage work that cannot be outsourced or very high-skilled professional positions – and not much in between.

Industries expected to add workers in 2012 are research and development, business services, health care and hospitality.

The institute predicts that housing construction will increase by 15 percent to 5,700 units. But since the industry is recovering from depression-era levels, the impact on the labor market is not expected to be strong.

“The basis of the increase forecast is largely upon the population growing 0.9 percent, and employment rising 1.8 percent,” said Kelly Cunningham of the NUSIPR. “The ratio of new construction to population gain remains very low.”

Demand will also increase because many young adults have been living with their parents since the recession started, Cunningham said.

The growth in demand will be somewhat offset by foreclosures, he said. According to the report, the housing vacancy rate rose to 6.7 percent this year, from the 4.4 percent prevalent over most of last decade.

– City News Service