COVID-19 IMPACTS A YEAR IN REVIEW - SANDAG
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THE SAN DIEGO ECONOMY
COVID-19 IMPACTS
A YEAR IN REVIEW
MARCH 2021
As the regional leader in economic analysis, the SANDAG Data Science and
Analytics team uses complex, descriptive, and predictive data to inform and support
policy decisions that promote economic, social, and environmental prosperity in the
San Diego region. The team works to provide critical information for policy makers
and elected officials to make intelligent investments for the San Diego region.THE SAN DIEGO ECONOMY Highlights
COVID-19 IMPACTS ▶ While COVID-19 and consumer behavior
change had a significant impact on the
economy (San Diego Real Gross Regional
A YEAR IN REVIEW Product (GRP) is down 3.1% to 4.5% which
measures between $7-$10 billion in calendar
year 2020), it could have been far worse. This
MARCH 2021
is due in large part to the unprecedented $3.5
trillion in capital influx approved by the federal
government through stimulus payments and
supplemental unemployment benefits.
INTRODUCTION ▶ Unlike typical recessions, during the COVID-19
recession, the stock market reached new
The COVID-19 pandemic dominated the news in 2020
highs and asset prices went up, all while the
and led to significant business closures and job losses
economy was contracting and job losses were
nationally and in the San Diego region. The impacts increasing. The real estate market posted
resulting from the stay home order have reshaped increases in home prices. The Federal Reserve
the local economy and the effects will be long-lasting. lowered its benchmark interest rate,1 leading
to historically low mortgage rates below 3%
During the past 12 months, SANDAG produced a number
and allowing many people to purchase a
of reports that provided critical information related to
home. This in turn has fueled the housing
unemployment statistics, the impact of the pandemic market where prices increased nearly 9% in
by business sector, and analyses of the hardest hit 2020 from the previous year.
around the region. This Year in Review report analyzes 12
▶ There was considerable variation in how
months of data to provide insights into what the recovery COVID-19 impacted local businesses, with
might look like for the region as the COVID-19 pandemic 89%2 of the region’s job loss in three sectors
continues into 2021. – tourism (52%), education (22%), and retail
(15%).3 According to the San Diego Tourism
Authority, visitor spending in 2020 fell to the
lowest level in 20 years.
▶ Similarly, individuals and households were
disproportionately affected, with some
professionals able to work from home with
little economic impact, and others, often
those with fewer years of formal education,
were significantly negatively impacted. Nearly
64% of Hispanic and 60% of Black individuals
who responded to the Census Household
Pulse Survey reported loss of employment
income for themselves or someone in their
household since March 13, 2020.
▶ Looking forward, as stimulus funding and
vaccines continue to arrive locally, businesses
will start to reopen. For the hardest hit local
_________________________________ businesses, recovery is expected to start later
1
https://www.federalreserve.gov/monetarypolicy.htm in 2021 as pent up demand for services such
2
Based on SANDAG estimates February to December 2020. as travel increases. Sectors such as innovation
3
The tourism industry includes leisure and hospitality (arts, entertainment, recreation, will continue with business as usual, and
accommodation, and food services). The retail industry includes retail, wholesale others, such as home improvement, will
trade, other services such as equipment and machinery repairing, promoting or
administering religious activities, grantmaking, advocacy, dry cleaning and laundry,
continue their slow but steady growth.
personal care, death care, pet care, photofinishing, temporary parking, and dating
services. The education industry includes all public and private education.
PAGE 2How significantly was the economy impacted by COVID-19?
The extended stay home order that was first issued in March 2020 continued to have an impact on the
San Diego region’s economy as the year ended. As Figure 1 shows, the San Diego region’s unemployment
rates were significantly impacted and remained higher than they were during the 1991 or 2008 recessions.
Current estimates are that the 2020 Real San Diego Gross Regional Product (GRP) will be somewhere
between 3.1% to 4.5% lower ($7 to $10 billion) than the previous year. However, due in part to Federal
intervention, the numbers were significantly better than what was initially expected when the pandemic
began last year.4
Some of the factors that helped moderate this decrease in GRP include the $3.5 trillion in government
subsidy through stimulus payments. The success of this cash infusion was evidenced by national indicators
such as a booming stock market (in 2020 S&P was up by 16.3%, Dow was up by 7.3%, and the Nasdaq was
up 43.6%5) and historically low mortgage rates (below 3%), allowing more individuals to purchase a home.
This in part has fueled the San Diego region’s housing market where prices have increased nearly 9% in
2020 from the previous year (Figure 2).
FIGURE 1: 105
SAN DIEGO REGION
Index 100 = Pre-recession Peak
EMPLOYMENT DURING 100
RECESSIONS
95
Source: U.S. Bureau of Economic Analysis
90
Dec (-7.5%)
85
80
Peak 1 year 2 years 3 years 4 years 5 years
1991 Recession Great recession COVID Recession
(100 = Jan 1991) (100 = April 2008) (100 = February 2020)
FIGURE 2: $800
SAN DIEGO REGION $701K
$700
HOUSING PRICES:
$631K $644K
MEDIAN PRICE $595K
Dollars in Thousands
$600 $579K
(existing single-family $557K
$530K
detached homes, $500K
$500 $461K
annual average)
$410K
$400 $385K $370K $385K
$359K
Source: California Association of $300
REALTORS®
$200
$100
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
_________________________________
4
For comparison purposes, the 2009 GRP during the Great Recession was down 5% from the prior year.
5
https://www.marketwatch.com/story/stocks-on-track-to-open-near-records-in-final-session-of-2020-11609416728
PAGE 3Public income support in the form of stimulus checks also more than compensated for the loss in labor income
in 2020 and disposable income increased by 7% in 2020 on average.6 In addition, the savings rate more than
doubled from 7.5% in 2019 to 16.4% on average in 2020 (Figure 3). While consumption has been partly limited
by the business shutdowns (fewer opportunities to spend due to access restrictions), several other factors have
contributed to the increase in the savings rate including the time it took to be able to spend stimulus money and
precautionary saving behaviors due to concerns about future economic disruption and income losses.
According to a recent
survey, the top 3 ways
Californians reported
spending their stimulus
22% 16% 14%
FOOD UTILITIES RENT
checks included:
FIGURE 3:
U.S. PERSONAL SAVINGS RATE (2002–2020)
Personal savings (disposable income – expenses) as a percentage of disposable personal income (DPI)
35
30
25
Percent
20
15
10
5
0
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Note: Each year includes data for January, May, and September.
Source: U.S. Bureau of Economic Analysis
_________________________________
6
U.S. Bureau of Economic Analysis
PAGE 4Which employment sectors were the hardest hit?
According to the San Diego
The key economic sectors that comprise the San Diego region’s Tourism Authority, visitor spending
economy are shown in Figure 4. As described in earlier publications, in the San Diego region fell from
the effect of the pandemic and consumer behavior change was not $ 11.6 billion
felt equally across all sectors. Tourism, education, and retail were in 2019 to
among the hardest hit industries, representing a third of our region’s
$ 5.2 billion
economy, and accounting for almost nine in every ten jobs lost since
the stay home order went into effect (Figure 5).
in 2020
FIGURE 4: FIGURE 5:
2020 COMPOSITION OF THE ESTIMATED JOB LOSS BY SECTOR
SAN DIEGO REGION BY KEY IN THE SAN DIEGO REGION
ECONOMIC SECTOR FEBRUARY TO DECEMBER 2020
10000
4,400
10% Tourism 2,000
0
-1,700 -600 -200
-10000 -7,400 -7,300
11% Innovation -14,400
-20000
-20,900
-30000
8% Military
-40000
-50000
12% Healthcare -50,000
-60000
Tourism
Education
Retail
Manufacturing
Healthcare
Government
Innovation
Professional
services
Transportation
Construction
9% Education
7% Government
89% of job loss in
Finances, the region
Insurance,
16% Real Estate,
Professional Source: SANDAG Estimates based on Employment Development Department
Labor Market Information Division data
Cancellation of events such as those held at the San Diego
15% Retail Convention Center caused an enormous multiplier effect on local
businesses such as hotels, restaurants, attractions, audio visual (AV)
companies, printers, caterers, grocery stores, dry cleaners, and gas
5% Construction
stations. According to the San Diego Tourism Authority (SDTA), the
4% Manufacturing
visitor industry lost 20 years of economic gain in 2020 and expects a
2% Transportation
five-year recovery horizon. Specifically, visitor spending fell from
Note: Percentages do not equal 100 due to rounding.
$11.6 billion in 2019 to $5.2 billion in 2020 (below the 2001 visitor
Source: SANDAG calculation based on State of California spending level of $5.9 billion), and the meeting and special
Employment Development Department Labor Market
Information – Industry Employment and Labor Force, event industry, which included 2.7 million visitors and $3.5 billion
and Quarterly Census of Employment and Wages for San
Diego-Carlsbad Metropolitan Statistical Area 2019.
in spending, essentially came to a stop and has yet to pick up.
PAGE 5Domestic air travel decreased by 74% and international air travel by 90% as of January 20217 and according to
the Port of San Diego (the Port), 93 of the scheduled 123 cruise ship calls in 2020 were canceled, resulting in
approximately $158.6 million in lost economic activity.8
Both locally and nationally, some industries were not affected as much, including innovation, manufacturing,
construction, finance, insurance, military, which had a stabilizing effect on the region.
Some additional data that sheds light on how things have shifted during 2020 relate to consumer spending
and foot traffic around the region. As Figure 6 shows, there has been a shift in consumer spending behavior
during 2020 in the San Diego region, with less money spent on recreation and personal care services, and more
on durable (e.g. appliances, electronics, jewelry, home furnishings) and nondurable goods (e.g. food, paper
products, clothing, cleaning products). In addition, as Figures 7 and 8 show, consumer spending nationally
has been greater for food stores than restaurants, but they had trended together up until the pandemic, at
which point spending at food stores spiked, as would be expected, and spending at restaurants decreased
significantly. However, the shifts between online shopping and shopping at brick-and-mortar stores have shown
an interesting difference. Specifically, while online sales jumped at the time of the stay home order and sales at
brick-and-mortar businesses dropped, the increase in sales at the latter has not resulted in a comparable drop in
the former. That is, it appears that while individuals are frequenting actual stores to make some purchases, they
are continuing to purchase more things online than they did pre-pandemic.
FIGURE 6:
ESTIMATED Recreation services
CHANGES IN Other services
SPENDING IN Transportation services
THE SAN DIEGO Food services
REGION POST Accommodations
COVID-19 Health care
(Q4 2019 to Q4 2020)
Financial services and insurance
Housing and utilities
Source: SANDAG
Estimates based on U.S. Nondurable goods
Bureau of Economic
Durable goods
Analysis data
-2 -1.5 -1 -0.5 0 0.5 1 1.5 2 2.5
Dollars in Billions
_________________________________
7
Data compiled online at: https://www.san.org/News/Air-Traffic-Reports January 01, 2021 report
8
In terms of how this affected the Port directly, it is important to note that the Port does not collect taxes, but rather, operates with funding from the Port’s hotel, restaurant,
retail, and attraction tenants as portion of their sales (5% to 10%). These concession sales fell by $31 million in calendar year 2020, with revenues of $84.3 million in 2019 and
$53.2 million in 2020. The Port’s total operating revenues fell by nearly $50 million in calendar year 2020, from $188 million in 2019 to $138 million in 2020.
PAGE 6FIGURE 7: $90,000
U.S. SALES FOR
$80,000
FOOD STORES
VERSUS $70,000
U.S. Retail Sales
RESTAURANTS
Dollars in Millions
$60,000
$50,000
Source: U.S. Census
Bureau, Advance
$40,000
Monthly Retail Trade
$30,000
Report
$20,000
Food and Beverage Stores
$10,000
Food Services and Drinking Establishments
$-
JUL 2013
OCT 2011
MAY2012
JAN 2017
SEP 2014
JAN 2010
FEB 2014
APR 2015
JUN 2016
JUL 2020
MAR 2011
DEC 2012
OCT 2018
DEC 2019
AUG 2017
NOV 2015
MAY 2019
AUG 2010
MAR 2018
FIGURE 8:
$100,000
U.S. RETAIL
$90,000
SALES ONLINE
VERSUS BRICK- $80,000
U.S. Retail Sales
Dollars in Millions
AND-MORTAR $70,000
$60,000
Source: U.S. Census $50,000
Bureau, Advance
Monthly Retail Trade
$40,000
Report $30,000
$20,000
Brick and Mortar
$10,000
Nonstore Retailers
$-
JUL 2011
JAN 2011
JUL 2012
JUL 2013
JUL 2015
JUL 2017
JUL 2016
JUL 2019
JUL 2018
JUL 2010
JUL 2014
JAN 2012
JAN 2013
JAN 2015
JAN 2021
JAN 2017
JAN 2016
JAN 2019
JAN 2018
JAN 2010
JAN 2014
JUL 2020
JAN 2020
PAGE 7Figure 9 further demonstrates the varied impact of the pandemic on businesses in the San Diego region. Home
and hardware centers saw an increase in foot traffic during summer months (up nearly 24% since the first stay
home order), as many residents took on more home improvement projects. Apparel stores, sit-down restaurants,
and department stores were among the hardest hit early in the pandemic during the first week in April 2020,
with foot traffic down between 60% and 77%. As of January 2021, with the San Diego region in the purple tier,
activity at various businesses remained down, between 26% to 61% percent below pre-COVID-19 level.
FIGURE 9:
ACTIVITY LEVELS AT BUSINESSES IN THE SAN DIEGO REGION
Stay home Reopening Stay home
40% order Reopening rolled back order
20%
0%
-20%
-26%
-40%
-40% -43%
-46%
-56%
-60%
20 to 35%
-80%
30 to 80%
40 to 60%
-100%
MAR APR MAY JUN JUL AUG SEP OCT NOV DEC JAN
2020 2021
Auto Dealers Pharmacies Florists Apparel Stores
Coffee and Snack Bars Auto Repair/Maintenance Recreation Products Furniture and
Sit Down Restaurants Fast Food Restaurants Gas Stations Appliance Stores
Department Stores Home Centers/ Grocery Stores
Hardware Stores
Source: SafeGraph COVID-19 Response Dataset - Weekly Patterns
PAGE 8Was everyone equally affected?
Just as the effect of COVID-19 on the sectors varied, so it has varied among different types of employees. One
of the groups most significantly hit since the pandemic began was individuals in the lowest paying jobs in
the region (Figure 10). Nearly one in four people who have jobs that do not require a college education are
still unemployed.9 Although in the beginning of the pandemic, there was a dip in all earning categories, those
jobs that require a college education and are considered white collar and could be telecommuted or worked
from home showed a rather quick recovery. In contrast, nearly 40% of the jobs that pay below $27,000 (or
approximately $15 per hour) were lost at the onset of the pandemic and 25% of those jobs still have not come
back as of December 2020, the most recent data available at the time of this report.
FIGURE 10:
5% 3%
PERCENT CHANGE
0%
IN EMPLOYMENT BY
-5% -6%
INCOME CATEGORY
-10%
IN THE SAN DIEGO
-15%
REGION, MARCH TO
-20%
DECEMBER 2020
-25% -25%
-30%
Source: Estimates based on data from
Opportunity Insights Economic Tracker -35%
based on research from Raj Chetty,
-40%
John N. Friedman, Nathaniel Hendren,
MAR APR MAY JUN JUL AUG SEP OCT NOV DEC
Michael Stepner, and the Opportunity
2020
Insights Team tracktherecovery.org
Below $27,000 $27,000 to $60,000 Over $60,000
Additional analyses of data from the Census Household Pulse Survey from California residents further
demonstrates the disproportionate effect of the pandemic economically on individuals of different races/
ethnicities and households, as has been noted in previous SANDAG reports. As Figure 11 shows, 64% of Hispanic/
Latino individuals and 60% of those who identified as Black (alone, not Hispanic) reported that they or someone
in their household had been negatively impacted economically as a result of the pandemic, followed closely by
those who identified with two or more races (not Hispanic) (57%). In comparison, 49% of those who identified as
White (not Hispanic) reported a negative economic impact.
FIGURE 11: Hispanic or Latino
64% 36%
LOSS OF (any race)
EMPLOYMENT Black alone,
61% 39%
INCOME BY not Hispanic
RACE/ETHNICITY Two or more races,
57% 43%
not Hispanic
SINCE
MARCH 13, 2020 Asian alone,
56% 44%
not Hispanic
Source: Census Household Pulse White alone,
Survey, Week 23 *California not Hispanic 49% 51%
respondents
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Yes No
_________________________________
9
Estimates based on data from Opportunity Insights Economic Tracker based on research from Raj Chetty, John N. Friedman, Nathaniel Hendren, Michael Stepner, and
the Opportunity Insights Team tracktherecovery.org
PAGE 9What might recovery look like?
As we reach 12 months since the stay home order was issued, COVID-19 continues to dominate the news. If our
region continues to see government subsidies and improved vaccine distribution, it appears feasible that things
will become more normal in summer or fall 2021. Business sectors that fared well during the pandemic should
continue to grow at a steady pace. These include innovation, manufacturing, construction, finance, insurance,
and military. Other sectors that were hardest hit, such as tourism, retail, and education, should quickly return to
Text here
normal as the economy reopens. As of the date of this publication, President Biden is expected to sign HR 1319
– The American Rescue Plan Act of 2021. This $1.9 trillion bill, along with other Federal support, will continue to
bolster the economy in 2021.
PAGE 10
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