Economist gives Camarillo high marks
By Nancy Needham nancy@theacorn.com

Two leading economists brought a full house to the grand ballroom of Camarillo's Spanish Hills Country Club last week as about 170 people gathered to hear what the future may hold.

At the Nov. 2 Camarillo Chamber of Commerce forecast luncheon, economists Bill Watkins and Robert Parry spoke about how inflation, unemployment and other factors are expected to affect next year's economic outlook.

"There is a lot more uncertainty than normal," said Watkins, who is on staff at the Economic Forecast Project at UC Santa Barbara.

A former economist at the Board of Governors of the Federal Reserve System in Washington, D.C., Watkins gave Camarillo high marks for building a diverse economy that includes a growing university, agriculture and retail.

He based his assessment on employment, housing and other data.

Watkins expects home prices in Camarillo, Thousand Oaks and the surrounding areas to remain flat for the next 18 months. After that he expects prices will begin to rise again, but slowly.

If trends continue as expected, Ventura County's single-family home sales will drop by about 25 percent, but the median home price will remain firm, the UC Santa Barbara forecast predicts.

Watkins said Amgen and Countrywide continue to be the biggest factors affecting the Thousand Oaks economy.

"There is a little risk with the recent Countrywide announcement of 2,500 layoffs-other than that, the city is doing fine," Watkins said.

Statistics show Thousand Oaks captures 25 percent of retail sales in Ventura County, followed by Oxnard with 22 percent, Ventura with 19 percent and Simi Valley with 14 percent.

Parry brought mostly good news-with one exception-as his presentation focused on the national economy.

"The fly in the ointment is inflation," said Parry, director of Countrywide Financial Corporation and Countrywide Bank. Parry also served as president and chief executive officer of the Federal Reserve Bank of San Francisco for 18 years.

"Inflation is the one aspect that has not turned out as good as economists would like," he said.

Parry explained what he called "the Fed's game plan" for the past two years by comparing inflation to steam inside a boiler.

"They try to take steam out of the economic boiler by raising interest rates."

He said this has been done to keep the economy growing by less than 3 percent a year. Controlled growth keeps a slack in the labor market and prevents factories from producing at high rates, he said.

An increase in energy prices caused the federal plan to work less smoothly than hoped for, but Parry still believes the economy remains on track.

For 2007, he predicts the economy will make what he calls "a near-perfect landing" or will grow even stronger.

"Parry is a very wise man. Listen to him," Watkins said.

Watkins showed slides explaining why the business owners and Chamber members in attendance could look positively into 2007. California's economy is doing better than that of the United States as a whole, Watkins said.

California's workforce productivity and global trade contribute to the state's strength, he said.

Camarillo was described as having a dynamic economy with an industrial sector that is still growing. A slowdown in new home building should not affect other commercial construction, such as retail space, which is expected to remain strong, Watkins said.

Watkins warned that the area has become too expensive to support lowproductivity employment such as the $20,000ayear jobs created from laborintensive crops such as strawberries. High home prices could eventually cause school enrollment decreases and a decline in the local middle class. But he said for now, 2007 looks good.

Ventura County's gross output exceeded $50 billion for the first time in 2005 and is expected to exceed $60 billion in 2008, according to UCSB statistics.

The annual Ventura County luncheon was well received by the local business community.

"Knowing what is going on is an important part of my job," said Samson Ghaffari of Edward Jones Investments.