Laura Choi, Federal Reserve Bank of San FranciscoApril 24, 2013San Diego Banker CRA Roundtable

The views expressed in this presentation are my own and do not represent those of the Federal Reserve Bank of San Francisco or the Federal Reserve System.

SanDiegoLaborMarketandEconomicOverview

U.S. GDP growth 0.4% for Q4 2012

‐10

‐8

‐6

‐4

‐2

0

2

4

6

2005 2006 2007 2008 2009 2010 2011 2012

Percen

t Cha

nge

Percent Change in Real GDP, 2005‐2012

Source: Bureau of Economic Analysis

4th Q 2008: TARP

1st Q 2009: ARRA

Western states showing stronger GDP growthPercent Change in Real GDP by State, 2011 vs. 2010

CA2.0

Highest quintileSecond quintileThird quintileFourth quintileLowest quintile

U.S. = 1.5

Far West = 2.1

California mortgage delinquencies continue to fall

0

200,000

400,000

600,000

800,000

2005 2006 2007 2008 2009 2010 2011 2012

Num

ber o

f Mortgages

Loans in Foreclosure All Mortgages Past Due

Source: Mortgage Bankers Association, National Delinquency Survey

CA housing starts slowly trending up

0

50

100

150

200

250

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

New

 Hou

sing

 Unit S

tarts (in th

ousand

s)

Housing Starts (in thousands), California 2000‐2012

Source: Bank of Tokyo‐Mitsubishi UFJ, Haver Analytics. Seasonally adjusted.

So. California house prices stabilized and trending up

50

100

150

200

250

300

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

House Price Index (2000=100)

LA‐Long Beach‐Glendale

Santa Ana‐Anaheim‐Irvine

San Diego‐Carlsbad‐San 

Marcos

CA

Source: HFHA House Price Index (formerly OFHEO House Price Index)

California and Nevada have the highest unemployment among 12th District states

11.8

10.8

8.9

8.4

8.4

7.1 7.5

6.2

5.9

9.6

9.6

8.4

7.9

7.5

6.5

6.2

5.2

5.2

 ‐

 2

 4

 6

 8

 10

 12

 14

NV CA OR AZ WA AK ID HI UT

Une

mploymen

t Rate (seasona

lly adjusted)

Unemployment Rates in the 12th DistrictFeb. 2012 Feb. 2013

U.S. (Feb. 2013) ‐ 7.7%

Source: Bureau of Labor Statistics

California labor force continues to grow, employment recovering

14

15

16

17

18

19

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Individu

al W

orkers (in millions)

Labor Force and Employment in California, 2003‐2013

Labor Force

Employment

Source: Bureau of Labor Statistics

California has added jobs for the last several quarters , San Diego job growth on pace

‐8%

‐6%

‐4%

‐2%

0%

2%

4%

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Employment (Year‐over‐Year Growth)CA LA SD

Source: Bureau of Labor Statistics (quarterly data through end of 2012)

Unemployment rates declining in Southern California counties

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

County Unemployment Rate, 2000 ‐ 2012

San Diego County

Los Angeles County

Orange County

Source: Bureau of Labor Statistics, not seasonally adjusted

San Diego employment continues to grow

1,140

1,160

1,180

1,200

1,220

1,240

1,260

1,280

1,300

1,320

1,340

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Total N

onfarm

 Employmen

t (in th

ousand

s)

Total Nonfarm Employment (in thousands) 2003‐2013San Diego‐Carlsbad‐San Marcos 

Recession

Source: Bureau of Labor Statistics, not seasonally adjusted

But long-term unemployment persists

Source: Bureau of Labor Statistics, Current Population Survey (Courtesy of CA EDD)

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

Jan‐05

Jul‐0

5

Jan‐06

Jul‐0

6

Jan‐07

Jul‐0

7

Jan‐08

Jul‐0

8

Jan‐09

Jul‐0

9

Jan‐10

Jul‐1

0

Jan‐11

Jul‐1

1

Jan‐12

Jul‐1

2

Jan‐13

Unemployment in California by Duration(12 month moving average)

More than27 weeks

5‐14 weeksLess than5 weeks15‐26 weeks

Despite improvements in unemployment, California labor market remains stressed

0

5

10

15

20

25

2009 2010 2011 2012

California U‐3 and U‐6Four‐quarter average, % of total* labor force

Source: Bureau of Labor Statistics* Total labor force and unemployment (U‐6) includes discouraged and marginally attached workers and those working part time for economic reasons, as defined by the Bureau of Labor Statistics.

Total Unemployment (U‐6)

Official Unemployment (U‐3)

Discouraged/Marginally Attached Workers

Source: National Employment Law Project

‐21%

‐60%

‐19%

58%

22%

20%

‐80% ‐60% ‐40% ‐20% 0% 20% 40% 60% 80%

Lower Wage

Mid Wage

Higher Wage

Jobs Lost in the Recession Jobs Gained in the Recovery

Growth in lower wage work

$27,186

$21,008$18,824 $18,221

$0

$10,000

$20,000

$30,000

$40,000

$50,000

$60,000

Office Clerks Retail Salespersons Cashiers Food Preparationand Servers

Source: Bureau of Labor Statistics, U.S. Department of Health and Human Services poverty guidelines, American Communities Survey

U.S. Median Household Income ($52,762)

Poverty Limit 4‐person Household ($22,350)

Income needed to afford median rent ($34,840)

Source: Bureau of Labor Statistics, Current Population Survey

Earnings and unemployment by education, 2012

$0

$200

$400

$600

$800

$1,000

$1,200

$1,400

$1,600

$1,800

$2,000

0

2

4

6

8

10

12

14

NoDiploma

HighSchool

Somecollege

Assoc.Degree

BA MA Prof.Degree

Ph.D

Med

ian Weekly Earnings in

 2012

Une

mploymen

t Rate ‐2

012

Highest Level of Education Completed

Unemployment rate Median weekly earnings

Real wages have fallen over time for less educated

70

80

90

100

110

120

130

1973 1977 1981 1985 1989 1993 1997 2001 2005 2009

Real Hourly Wages by Education, 1973‐2011 (Indexed, 1973=100)

Source: Economic Policy Institute, The State of Working America 12th edition.

Less than H.S.

High School

Some College

College

Advanced Degree

Concluding Thoughts

• California and San Diego economy showing signs of improvement• Housing market strengthening• Unemployment declining

• But employment conditions still difficult for many

• Considerations for LMI workers• Fewer mid‐wage jobs, more low‐wage jobs• Most low‐wage jobs don’t pay living wages• Increasing importance of educational attainment