Local to Global: Marin Economic Forum’s Covers a Ton of Ground at ‘FORECASTING THE FUTURE’ EVENT

Alex Boyd addressing attendees of the Marin Economic Forum's "Forecasting the Future" event at Marin Center's Showcase Theater on Jan. 29.

In a Marin Economic Forum “Forecasting the Future” presentation that ranged from macro-level GDP and interest rate projections to Marin’s localized challenges business retention and sustaining vibrant downtowns, MEF Chief Economist Robert Eyler managed to strike a chord that captured the dichotomy of macro economic forces and micro-level purchasing decisions.

“How many of you are Amazon Prime members?” Eyler asked, as the vast majority of the 200-plus executives and business leaders in the room raised their hands.

“That’s not helping your downtown by the way,” he said, having noted earlier that “our downtowns need to be competitive and we need to think about that every day of the week.”

The event at the Marin Center’s Showcase Theater in San Rafael, was organized by Marin Economic Forum CEO Mike Blakeley and his team and also featured Lenny Mendonca, the chief economic and business advisor to Gov. Gavin Newsom, as well as Alex Boyd, who has spearheaded much of MEF’s data collection and analysis for its Business Retention and Expansion project, from surveys and focus groups of business owners throughout Marin about the challenges they face.

Here are some of the most notable data points and commentary, in no particular order:

• Economists are not predicting any recession, i.e. two consecutive quarters of reduced growth, before 2022. They also don’t see the unemployment rate rising above 4 percent until at least 2022. “Why do we have such robust labor markets and relatively slow growth on GDP? Low wage jobs,” Eyler said.
• After a year of aggressive rate cuts in 2019, “we are probably looking at one rate cut this year, probably in June, but that’s it,” Eyler added.
• “The financial side of the house is pretty good,” he said. “The foundations of the American economy and the California economy, because California is a driver of the American economy, look pretty good.”
• 2020 elections. “Donald Trump is likely to win re-election given the makeup of the Electoral College and a continued good economy. History suggests that’s going to happen. California is not likely to decide the election, the Electoral College will. Short of a major event or a major economic downturn. If impeachment and removal from office happens, all bets are off.”
• What has been the medium- and long-term economic impact of fires and PG&E power shutoffs? “Very little,” Eyler said. “The labor market has absorbed many of those displaced people. And the power shutoffs are not going to cause people to leave California in droves. When it’s February 1 on Sunday and you’re outside playing golf, you’ll rethink the idea of moving to Minnesota.”
• Building permits. “We have had an amazing number of permits issued in Marin, but do we need to build more housing? The answer is absolutely.”
• Marin County, in net, has lost residents over the past 10 years. But births do still exceed deaths in Marin, and while some high income, high wealth families may be moving out, “unless they migrate out with entrepreneurship, it’s not a major problem,” Eyler said.

• Will relatively low wage growth jobs tend to lead to automation? "Yes, for those that can afford to make that transition," Eyler said. If construction wages continue to go up, robotics is coming more and more."

• Too much of a good thing. Several Bay Area downtowns like Healdsburg and Sonoma suffer from a big run of visitor influx that has resulted in blowback about parking and traffic problems. So while they seem to have solved the issue of downtown foot traffic, that success has caused other problems. "A lot of it is finding the right retail mix and driving visitors through these areas – as well as residents," Eyler said. "But you absolutely need to draw in those visitors."
• Mendonca, Gov. Gavin Newsom’s chief economic advisor, said that while the are not forecasting a recession, they are budgeting for a slowing of growth, following the lead of former Gov. Jerry Brown and “building resiliency” into the budget with a rainy day fund and “investing in things that are one-time and catalyze change on the challenges that face us, particularly “the human crisis” of homelessness, as well as climate change and sea level rise. Mendonca noted that California’s rainy day fund is larger than the entire budgets of most of the states in the rest of the country.
• The Bay Area’s massive housing shortfall. “We are extraordinarily dependent in the Bay Area on places like San Joaquin County, where 85,000 workers a day commute into Bay Area,” Mendonca said. “That’s 85,000 people spending several hours a day in their cars. It’s partly about building more housing but it’s also about creating more job opportunities in the places where people are commuting from. But this isn’t about getting rid of local control.”
• Marin County has an 18.3 percent poverty rate – a statistic that may surprise many people. “Despite 18 straight months of job creation, we are nowhere near full employment,” Mendonca said. “The reality is that while the California economy is robust and growing and you wouldn’t trade California for any other state in the world, it’s not at a level of earnings that can allow people to actually live here.” “We need to provide more opportunities for all to participate fully in our economy. That prosperity needs to be more broadly shared, not just on the coasts but more broadly across the state,” he added, pointing to the state’s Regions Rise Together initiative.
• That desire for more broadly shared prosperity would not only benefit those that are exposed to more economic opportunity, Mendonca said, particularly because some 70 percent of state GDP is based on consumer spending. “You’d like for everyone to have that money to spend,” he said. 
• California’s single largest by value export is zero emissions vehicles, up from zero 10 years ago. “That would not have happened without significant investment by the state,” Mendonca said. “Ignoring issues and expecting someone else to deal with them is not planning for the future. From that we’ve created new, better jobs and higher wages
• Small business dominates: Nearly 70 percent of businesses in Marin have fewer than 10 employees, with 44 percent having fewer than five. The vast majority of businesses in Marin are owned by people who in Marin, with 63 percent saying they live here. Many of the most successful businesses in Mill Valley are owned by people who live and work in town and are deeply invested in the community’s vitality.
• Boyd shared that his BRE data collection indicated that although by many measures the Marin business sector is doing pretty well, many business report problematic issues such as local workforce supply being outpaced by demand, high cost of living, transportation and mobility challenges and regulatory environment. More than 50 percent of respondents said permits and inspections are their biggest concern adversely affecting their business, with 60 percent saying that their biggest challenge is hiring and retaining employees.
• ​Blakeley said that identifying solutions to the challenges revealed by the BRE work will be a larger group effort in the coming months. He also shared a pair of success stories: an unnamed board member has formed an angel fund focused on place-based investing in Marin, a step toward providing local companies with better access to funding; and a proactive partnership between College of Marin and Toyota of Marin in San Rafael, which has struggled to hire and retain employees. "There just aren't enough people raising their hands to be in the automotive business, " said Toyota of Marin GM Diana Kennedy. "And these are jobs that pay really well." Kennedy connected with College of Marin Jonathan Eldridge, and they worked out the details on a training program via the college's in-house automotive shop.

The 411: MORE INFO on the Marin Economic Forum.

HERE'S A FULL RECORDING OF THE EVENT: