A panel of four South Coast economic experts agreed Nov. 8 that another recession in the coming year is unlikely in light of continuing positive fiscal trends.
After the discussion ended, Sears announced it was closing 40 more stores, including its Santa Barbara location, after the big holiday retail season. Last month, Sears said it was shutting down 142 “unprofitable” stores nationwide.
Chris Snowden, of AmeriFlex Financial Services, told a Santa Barbara Executive Roundtable crowd that, “At some point, (the recession) will happen.”
And, while pointing to many positive economic indicators, economist Mark Schniepp predicted the U.S. gross domestic product will start to decline in the next several years and down to 1 percent by 2020.
He said that trend will make the nation “vulnerable to inflation.” However, in the wake of this week’s mid-term elections, Schniepp said he’s never seen more satisfaction with the economy than ever before.
Panelist Brian Johnson, of Radius Group, said overall the economy is sound, but retail “has a lot to work through, but it’s still growing.”
Snowden said tariffs and potential trade wars may raise the specter of a looming recession and political investigations may cloud a rising stock market. Interest rates will surely rise, he said.
Schniepp touted high consumer confidence and the decline of unemployment with increasing wages. However, that trend could lead to higher inflation.
Locally, Johnson said while vacancies on State Street pose problems, retailers are getting more creative with their use of space. He pointed to the recently opened Mosaic Artisan Goods, 1131 State St., which has four vendors who sell beer, empanadas, juice and doughnuts, respectively.
While the county’s most visible commercial corridor has several large vacant structures at this time, State Street has a number of small spaces with less than 3,000 square feet that are empty now, Johnson said, referring to the nearly three dozen tenant-less spaces.
He said the State Street problem will be helped if businesses do more to bring local residents back to the downtown area and not just cater to cruise ship tourists. “We need to come up with new concepts,” Johnson said. “State Street needs to evolve.”
He said no firm plan exists to occupy the former Macy’s building at State and Ortega streets, but, “There’s still a lot of talk.” The building is housing holiday-related pop-ups.
Johnson said State Street doesn’t need more retail. He joked about the new Target store going into the Galleria building near La Cumbre Plaza. It’s only “half a Target” someone said since patrons are supposed to call in their orders and pick them up at a drive-through. Target also is coming to the now-closed Kmart in Goleta. Sears also owns Kmart.
He also warned that if Sears closed in La Cumbre Plaza, “That really will be something to watch,” since the corporation that owns Sears also owns the store’s building in La Cumbre.
Ironically, shortly after Johnson spoke, Chicago-based Sears said it was closing the Santa Barbara store. Sears Holdings declared bankruptcy this year and earlier shuttered a number of stores across the nation.
The panelist joked that the Funk Zone of late is getting more snack-type vendors, perhaps because of the legalization of cannabis, which might produce a greater need for munchies.
The fourth panelist, Keith Berry, of Keith Berry Real Estate, said rumors are circulating that many Montecito residents are fleeing to Hope Ranch in the wake of January’s mudslide, which killed 23 people. He said the tragedy only affected 5 percent of the homes in the area.