Tax cuts impact on San Diego
SAN DIEGO (KUSI) — The Republican tax plan will go before the House Ways and Means Committee Wednesday with most Democrats united in opposing it.
The President is calling on industry groups to build momentum for what he said is the biggest tax event in the history of the country, but what will it do for San Diego?
The tax plan comes as the economy is expanding, consumer confidence is high and businesses are spending in anticipation of the tax cuts.
Both San Diego and California have low unemployment rates, under 5 percent, but for the first time in a long time, the state is growing more jobs than San Diego.
Still, tax cuts can add jobs locally.
Economist Alan Gin publishes the monthly report on the regions economic indicators.
"Despite all the concern about the business climate here, we’re still a pretty good economy. We have a lot of the leading edge industries," Gin said.
Gin believes tax cuts for business and individuals could help with job growth.
"We’re doing OK here in San Diego. Our unemployment rate is really low now at 4.1 percent, so that is near full unemployment. The problem we’ve seen in recent months, particularly in 2017, is that the rate of job growth has slowed," Gin said.
There is a caveat to expanding with tax cuts for California and San Diego: Housing and skilled workers.
"The worry right now in terms of housing is the construction of housing. There are big shortages in terms of land availability, particularly here in California and San Diego and also in terms of skilled workers," Gin said.
On the plus said, we’re out of a recession. The labor market is stronger, wages are increasing and consumer confidence is high.
"I think we’ll have positive growth locally, but again at a slower rate that we’ve seen in recent years," Gin said.
Nationally, Gin sees the economy continuing to expand and so will consumer spending.
"It’s pent-up demand we’ve seen over the last few years. The economy has got some momentum behind it and that’s carrying through at this point," Gin said.
Right now, there are no headwinds to growth, personal consumption is growing, the dollar is weaker and there is no major economy that is in recession.
The only dampening affect Gin sees is a hike in interest rates in the middle of an expansion.
"That could slow the economy, but still it could leave interest rates in relatively low levels," Gin said.
Another factor is replacing Janet Yellen as head of the Federal Reserve, which the president has indicated he may do this week.