Murky Ball

Economics is more than just numbers to William Roberts, executive director of the San Fernando Valley Economic Research Center at California State University, Northridge. He enjoys peeking behind the digits to find the stories they tell about economic activity. Those stories are what he finds fun about economics. “It is taking hard data, hard facts and making some sense out of it,” Roberts says. “I find that intellectually challenging.” The research center gathers and analyzes demographic and economic statistics and prepares an economic report and housing market report. One challenge the center faces, however, is getting current data. Results of the American Community Survey, done monthly by the U.S. Census Bureau, lags by two years. To fill in gaps, Roberts talks with area business owners and has on the drawing board a program to survey Valley businesses every three to six months. “We’d collect information and then piece together a better picture of what is going on in the Valley,” he said. Roberts, who retired from CSUN after 40 years as an instructor in the economics and business department, has directed the research center since 2008. He served as the associate dean of CSUN’s business and economic school for 10 years, as graduate programs director for three, and as chairman of the Matadors Community Credit Union for five years. Question: How was the overall San Fernando Valley economy in 2013? Answer: It was basically a holding pattern for the Valley. If you look at the housing market and summarize the Valley for the last year, starting about June we hit a static holding pattern. Median prices have been sustained; they are not moving up or down over the last six months. Sales are sluggish. There is some evidence the housing market is coming back. I do expect unemployment to go down gradually over the next year. There are some decent signs coming out of 2013 that unemployment is dropping. Any particularly strong industries? We started to see some movement in the health industry. Then with all the hassles coming out of Washington and nobody really knowing what was going on with health care, that pretty much stagnated. We saw a little bit of an increase in government employment but not significantly. The best news coming out of 2013 is we are starting to see some improvement in the construction industry. What is driving that? Foreclosures are gone. We are down to about the level you would expect from the unemployment rate. There has been some recovery in median home prices. There are more people with equity in their home and now that the equity is there for some individuals they are using that to borrow against to remodel the home. We are also starting to see some demand for housing. There is no place to build houses in the Valley. So what we are starting to see – and there is evidence of this in the Woodland Hills area – is more and more apartment complexes. But are banks willing to lend? The advantage of the stability (in the housing market) is that banks are going to lend on what equity there is in the homes. They won’t have the fear that housing prices will drop in half again. With the equity there they will extend loans and that will cause people to start remodeling homes, use that to start up small businesses. In past recessions that is what has pulled us out, small business startups and construction. So the bottom line for next year? Next year looks to be the best of the last five. It’s not a great benchmark; the last five have not been great years. (Still) I’m optimistic about 2014. Is the Valley served well by the data that you collect? One of the difficult things about dealing with the economy of the Valley is you really cannot get data as we are not a political entity or political subdivision. What we do get is data that is two years old from the U.S. Census Bureau. So we have to extrapolate from other data that’s out there. The best data we get is on the housing market because you can get local housing data on a monthly basis. How do you compensate as an economist? A lot of it is just driving around and seeing what is taking place and then with the little data we have, we see if it makes any sense. The housing market is stagnant but it’s coming back because we see more open house signs on a typical corner than we did six to nine months ago. What needs to be done to get better data? Having the Valley declared as a political subset for data purposes by the (U.S. Bureau of Labor Statistics) would help but that’s not going to happen quickly. That comes out of Washington and there is no strong pressure for that. Most people just rely on L.A. data. We are different, we know we are different. This is more of a residential community; we have areas of health care, areas of financial, areas of entertainment. Those are not the same kind of businesses you find on the other side of the hill. What can be done to improve the Valley economy? Make L.A. a nicer place to work in from a pro-business perspective. The complaint I’ve heard in the years I’ve been in this position is that taxes in L.A. make it difficult to do business, getting building permits, going through the government bureaucracy to get anything done is difficult. Go to Burbank and look across the street to what is in L.A. and there is a major change in building activity that takes place. Part of the research center’s mission is releasing reports and forecasts, isn’t it? As best as possible. We used to do an annual forecast but then when Sept. 11 hit they clamped down on access to the data. The problem we’ve had for the last decade is getting hold of data for the Valley. We come up with a forecast but it’s not as full-blown as we used to do because we cannot get the numbers. Isn’t there an entire cottage industry of forecasters? There is an industry of forecasters out there. There’s UCLA, which does a California forecast and a national forecast. There’s a group out in Ventura, there’s a group locally at Cal Lutheran (University, in Thousand Oaks). How accurate are these forecasts? On and off. UCLA tends to do a fairly good job, reasonably accurate. When the recession hit in 2007-2008 it took them a while to recognize, yes, there is a recession. Virtually no one expected it to be there. How valuable are these forecasts? If you really look at the forecasts, it is not what number they forecast but what’s the story they tell around that forecast. Coming up with 8 percent unemployment rate for the Valley, there is a story. The story is we are better educated than on average the general Los Angeles-Long Beach-Santa Ana region is. In the forecast, the stories are much more important than the numbers they come up. If you cannot justify the direction you are moving then why are you going to believe it? How much is gut instinct a part of the forecasts? Any forecast is always gut instinct. You use your theoretical basis from the discipline as an economist. So it’s not just basically true gut – it’s the models you have, how you know the economy functions, from the data you have what kind of projections can you make. Gut-driven doesn’t feel like the right answer. But a lot of it is going around and talking to people. Not really formal surveys, but I discuss with business people in the Valley what they think is going on and try to piece that together. How much time do you spend at the Valley Economic Research Center? I am half-time, I’ve been here 40 years and I am retired but I am doing this as a half-time position, which is all it’s ever been. Instead of doing half-time teaching classes I am half-time doing this. What do you do with the rest of your time? I am doing some litigation consulting on the side and trying to ease into retirement. I haven’t figured out how to do that yet. You work for 40 years, it is difficult to stop and not put in the same amount of time. Any plans for when you do stop working? My wife has plans for me but I haven’t figured out what those are going to be. I still like dabbling in economics and the intellectual curiosity is still there. I expect to be doing that for the next decade at least. I have two, three hobbies I am trying to find more time for. What are those? Chinese brush painting and I do trail running. I am trying to map out time each week to do some painting and every other day to get out and run. So that eats up a little bit of the time. This interview has been edited and condensed for clarity and space reasons.