Economic summit speaker says much of the economy is strong, though Nevada County needs more housing
“We have been under-building (homes) for decades.”
That was one of the main issues Dr. Christopher Thornberg highlighted at the annual economic development summit Thursday, hosted by the Nevada County Economic Resource Council.
Thornberg — the director of independent research and consulting firm Beacon Economics, and director of the University of California, Riverside School of Business Center for Economic Forecasting and Development — said the housing issues in California and Nevada County aren’t related to affordability but, rather, a “housing supply crisis.”
Permits for housing construction, Thornberg said, are “heading down, not up,” due to high fixed costs — a point echoed by other developers in the county.
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To solve the problem, the economist suggested possibly getting rid of Proposition 13 in addition to rebalancing the tax system and bringing down income taxes. Prop. 13, a 1978 ballot measure, allows both residential and commercial property to only be reassessed when sold. Otherwise, assessment increases are capped at 2% a year.
Thornberg said he was also concerned about population stagnation in Nevada County, and that about 24 percent of county residents leave the area for work. However, he was intrigued by the county’s steadily declining unemployment rates.
“You have an incredibly tight labor market up here right now,” he said.
Comparatively, some of the largest economic growth is occurring in Placer County, he said.
Thornberg’s talk was presented at the Grass Valley Veterans Memorial Building, with a projector displaying his compiled economic data for the audience to interpret. Before Thornberg began, Nevada City Council member Duane Strawser discussed the focus of the Economic Resource Council, including its emphasis on tech, business mentorship and community development, as well as outreach and tourism.
Aside from advocating for more home building, Thornberg analyzed the economy at large.
His thesis: everything is fine. Don’t be concerned with headlines about an imminent recession.
The unemployment rate has been steadily declining and consumer spending is “healthy,” he said. Overall, he gave the U.S. economy a “B+” rating.
While he’s not presently concerned, there are a few things that give Thornberg pause about the future. They include wealth inequality, health-care cost inflation, pension and entitlement program costs, as well as labor and housing shortages.
“Every political economist will tell you that wealth inequality is one of the surest ways to cause democracy to fail because it creates a massive political (gap) between the haves and the haves not,” he said.
Thornberg said the Congressional Budget Office has come out with some solutions to long-term economic concerns, including increasing immigration (to ease labor shortages) and raising the age at which people receive retirement benefits by a few years.
But none of those will likely be fixed, he said, because of partisanship and ideologically extreme thinking.
“What I see,” he said, “is a growing radicalization of our political elites in D.C.”
To contact Staff Writer Sam Corey email email@example.com or call 530-477-4219.
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