The novel Coronavirus pandemic has caused unfavorable economic conditions for many residents living on the Westside, but business experts and community leaders said this week that locals should have hope for a fairly rapid recovery in the economy.
The Westside Council of Chambers, a group that advocates on behalf of economic organizations like Santa Monica’s Chamber of Commerce, hosted its annual State of the Westside event Thursday morning, which featured a presentation from Chris Thornberg of Beacon Economics. Though the event was hosted virtually for the first time this year, dozens of residents, business owners and other pertinent stakeholders gathered to discuss the latest economic data relating to Westside communities pre- and post-Covid-19 before hearing Thornberg offer insight into what local economies can expect on the road to recovery.
“Dr. Thornburg is an expert in economic and revenue forecasting and became nationally known for forecasting the subprime mortgage market crash that began in 2007,” said Diane Forte, a Government Relations Manager for Southern California Edison who described Thornburg as one of the few economists who went on-record to predict a global economic recession.
“You know, it’s interesting — we started out with that prediction I made back in 2006 about the course of The Great Recession and what happened. I would like to tell you I predicted this particular downturn as well but I don’t think anybody really did,” Thornberg said. “Well, two months later, of course, and we are well aware of just how serious it is.”
There’s no doubt that what’s been seen over the last few months has been truly eye popping, especially when one considers the fact that Gross Domestic Products and unemployment numbers have recently broken records all over the place, according to Thornberg. “And that, in turn, has led a lot of economists to talk about a call of recession.”
But just this week, Santa Monica City Council reviewed and closed out the fiscal year 2019-20 budget. During the process, city leaders said their extensive efforts earlier this year to address the economic impacts of COVID-19 have allowed the City’s fiscal health to stabilize.
“Revenues were marginally better than anticipated due to the early phased reopening of the economy, some hotels remaining open, and fewer people than anticipated deferring taxes and other payments,” staff said. And since revenues were slightly higher, about $12 million less than expected was moved to the city’s reserves to cover the shortfall caused by the pandemic.
The citywide budget is still $192.3 million less than the fiscal year 2019-20 Revised Budget and has 298.8 fewer full-time permanent positions and 122.3 fewer full-time equivalent as-needed positions, but staff projects that revenues will recover to pre-COVID-19 levels in fiscal year 2024-2025.
“Think about, for example, the Great Recession — six quarters of the U.S. economy contracted by about 6 percent in real terms. But that wasn’t the true pain of the Great Recession; it was the fact that it took over seven years for the economy to get back to normal levels of economic activity,” Thornberg said, stating, “This time around, it’s a completely different type of situation.”
It is more like a natural national disaster, which traditionally have tragic consequences in the short run but tend to not have long impacts in the medium-term, so the lessons of past business cycles are simply not applicable.
“This is a truly unique business cycle. And as such, there are different kinds of things happening,” Thornberg said. Thus, the prediction about how long it takes to recover can’t be based on past situations.
Clearly, the Westside is an economic dynamo — both in terms of the number of jobs and the quality of jobs for the overall area,” which is a trend he expects to continue, Thornberg added. “Because again… you’re going to see businesses continue to flock to those high demand areas, which by the way, is the Westside.
Some of the hottest office markets are in Santa Monica or Century City, and these cities will remain hot because people want to be here, Thornberg said. “And as a result of that… you’re still gonna see phenomenal demand.”