2024 economic outlook has Tulare County on the right track

Dr. Christopher Thornberg delivers the Keynote address at the 2024 Sequoia Regional Economic Summit.(Kenny Goodman)

Tulare County business leaders need to focus on housing supply and labor force development to keep up economic growth, says economist Christopher Thornberg

VISALIA – To keep up economic growth, Tulare County needs to find its narrative and push it out to the rest of California and beyond — that, and build more housing.

That’s the message Christopher Thornberg, founding partner of research and consulting firm Beacon Economics, had to share with local politicians and business leaders gathered at the Visalia Wyndham Hotel on March 1. Hosted by the Tulare County Economic Development Corporation (TCEDC), the annual Sequoia Regional Economic Summit provided its audience with a brighter economic outlook for the year ahead than some may have expected.

“We’re not gonna have a recession in 2024, almost assuredly not in 2025, either,” Thornberg said. “The overall momentum in our economy today is very, very strong, but with all that being said, there are things we need to start keeping an eye on — things that will create some turmoil and bumps in the road.”

Thornberg holds a Ph.D. in business economics from The Anderson School at the University of California, Los Angeles, and has been providing TCEDC and its partners with an exclusive economic outlook for many years. With each economic outlook, Thornberg puts national and state economic activity into context for the local economy and relies on data to drive his analysis.

The discussion on March 1 began with a recap of 2023, as Thornberg brought the audience back to his assertions this time last year that the United States would not enter into a recession. He explained that to outright say inflation would cause a recession “is a complete non sequitur that doesn’t make any sense.”

“Inflation is a sign of excess demand,” Thornberg said. “Recessions, in contrast, are a period of time when there’s not enough demand. They’re two entirely different things.”

Other than heightened interest rates impacting the real estate market, Thornberg said the rest of the national economy didn’t have much of a problem with rising interest rates because Americans have a lot of liquidity and because most American consumer debt is in the form of a fixed-rate mortgage.

“In other words, for most American households, this thing hasn’t meant anything to their month to month payments; it just is not a relevant issue,” Thornberg said.

2024’s local economic outlook

Specifically for California and Tulare County, Thornberg said that there are a lot of “scare stories” about the state and its economy — whether that be a population decline or a state government deficit — but people should “push all the stories away.”

“The state’s economy is fine; it is fine,” Thornberg said. “Things are fine in this state.”

Locally, Thornberg said that consumer spending has cooled off in the county, but it has done so at a higher level than before the COVID-19 pandemic.

In Visalia, Thornberg said taxable sales were down by about 1.3% from the previous year, but they were 38% higher than they were before the pandemic.

A representative from SoCal Gas visits with other participants in the 2024 Sequoia Regional Economic Summit. (Kenny Goodman)

Broken down into sales tax receipts by category, business and industry spending decreased by 0.5% over the last year, but was up 48.8% from the fourth quarter of 2019. Additionally, while building and construction sales were down 10.6% over the last year, they were 21.5% higher than the fourth quarter of 2019.

Further, Thornberg said that job openings have increased, weekly earnings growth is solid and “California is doing better than the U.S., and Visalia’s doing better than California.”

Two of the biggest challenges that the local economy is facing, however, include labor shortages and housing shortages, Thornberg said.

While Tulare County has “never been more prosperous than it is right now,” it’s also not seeing the kind of population growth it needs to feed its labor force growth, Thornberg said. He suggested the region lean into taking advantage of the prosperity it is seeing, and a good way to do so is by engaging in labor force training, up-skilling workers rather than up-waging them.

Dr. Christopher Thornberg delivers the Keynote address at the 2024 Sequoia Regional Economic Summit. (Kenny Goodman)

Additionally, Thornberg said that Tulare County needs to “build, build, build” its housing supply, specifically with multifamily units.

Thornberg said data is showing that while population declines, households are “spreading out,” with fewer people cohabitating. This is creating a need for more housing, and if there is no housing in the area, people are either going to leave or be “pushed in the alley.”

Narrative versus reality

Throughout his presentation, Thornberg wove the idea of social narrative versus economic reality into his discussion of fiscal policy and observed human action. He said that politicians and the media help create a narrative that “the end is nigh” and that the economy is driving the increased level of anger seen across the county.

Thornberg said that although as an economist he was taught to base economic models off of the “rational person,” he is seeing a world in which “the world that people think they see is different than the world that actually exists.”

Dr. Christopher Thornberg (middle) visits with Sun-Gazette Editor Paul Myers (left) and Publisher Reggie Ellis (right). (Kenny Goodman)

“We see the disconnect between the narratives and the reality – and this disconnect, not only is it long-lasting, but it has palpable implications for what happens inside our economy,” Thornberg said.

Thornberg cautioned against letting that social narrative overtake what is really happening, whether nationally or locally. Instead, Tulare County locals should focus on building up the narrative they want to see for their region.

Thornberg said that business leaders should look to the TCEDC for this narrative and learn it in order to engage in better planning, but also to tell the rest of the state about how Tulare County can be a great place to live, work and raise a family.

“This is what you need to get out there, get the word out here: ‘we have housing, we want to grow, we’re business friendly, move here,’” Thornberg said. “Keep pushing this narrative; that’s what’s going to make this place continue to succeed.”

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