Economic Outlook

Published April 30, 2023

At A Glance

  • Global progress in human development has been thrown into reverse by a global pandemic, a land war in Europe, a massive inflationary shock, and mounting climate catastrophe. After decades of globalization pushing unprecedented global growth and the emergence of a robust global middle class, a majority of the world's 8 billion people fare worse, not better, in education levels, life expectancy, economic well-being, and safety and security. Eurasia Group
  • The US economy is projected to enter a recession in 2023. At the March 2023 Federal Open Market Committee (FOMC), a division of the Federal Reserve, they indicated that from “their assessment of the potential economic effects of the recent banking-sector developments, the staff’s projection at the time of the March (2023) meeting included a mild recession starting later this year, with a recovery over the subsequent two years. County staff concur with this assessment and were concerned in 2022 about this potential for 2023. Minutes of the FOMC March 21-22, 2023
  • California data reflect broad-based hiring with leisure and hospitality, health care and social services, technology and construction posting solid gains. Increases in defense spending and the continued demand for tech will likely keep the economy growing. Risks to the forecast are the course of the pandemic and domestic migration on the downside and increased international immigration and accelerated onshoring of technical manufacturing on the upside. UCLA Anderson Forecast
  • The State of California Budget is facing at least a $22.5 billion deficit in 2023-24, just one year after a $55 billion surplus. This is the result of reductions in federal funds and declines in high-earner taxpayers, capital gains and job losses in the Silicon Valley technology sector. California Legislative Analyst’s Office
  • The Santa Cruz County economy is influenced by global, national, and state trends. Unemployment is expected to remain low, around 4.5 percent. However, the labor force participation is also decreasing due to an aging population, and is constrained further by the cost of housing and continued low housing production. DataShare Economic Security and Social Mobility

Local Economic Indicators

County Labor Force

Since March 2020, the labor force across Santa Cruz County has declined over 3 percent. Although the employment rate is 95 percent, the county wide labor force is 7 percent lower than its peak in June 2019. Labor force is defined as those who are actively searching for employment or waiting to be recalled from a temporary layoff. Those who are not in the labor force may be discouraged workers, marginally attached workers, or those who are part-time for economic reasons. Data is from DataShare Santa Cruz County.

2022 Median Age Map Image

County Median Income

Median household income across Santa Cruz County has increased by $28,837 (42.9%) since the 2011-2015 survey period to reach $96,083. Over that same time period the Hispanic/Latino population has had the largest increase in income, at 61%. A significant equity gap remains, and recent inflation and the trend of home price increases will counteract some of these gains. Data is provided by the American Community Survey within DataShare Santa Cruz County.

Housing chart image

Santa Cruz County Economic Outlook 2023-2030

We are aging rapidly

By 2030 one in four people living in Santa Cruz County will be over 65. Additionally, the generational gap has a stark ethnic divide, wtih 70 percent of people over 65 being white, and 70 percent of people under 18 being Hispanic or Latin. Population by Age

2022 Median Age Map Image

Our children cannot afford to live here

By one measure, Santa Cruz County is the second least affordable county to live in the United States. A major contributor to affordability is that no significant housing has been built since 1990. While this has protected some open spaces from development, its additional effects have been segregation and housing shifted to higher energy and resource use areas of California. Housing Problems

Housing chart image

We are experiencing more frequent and severe climate disasters

Santa Cruz County residents are already experiencing impacts from climate change from wildfires, extreme weather, poor air quality and more. A wide variety of impacts are likely to be felt with increasing magnitude as the concentration of greenhouse gases (GHGs) in the atmosphere continues to rise. The County’s single largest contributor to our greenhouse gas emissions is the personal vehicle. 


Emissions map image

We need to reimagine a County that challenges inequality and creates resilience

In order to build a sustainable, thriving economy, we have to find opportunities that not only allow our own children and youth to thrive, but allow more families to be included in an economy that values the contributions of the past and builds towards an equitable future. The County's 2023 Housing Element update is an opportunity to meet existing and projected housing needs for all segments of the community, including various household types, special needs populations, and all income levels. Doing this means taking meaningful actions that address disparities in housing needs and in access to opportunity, replacing segregated living patterns with truly integrated and balanced living patterns, and developing at greater densities within the County's urban services line. 

The County's Climate Action and Adaptation Plan, adopted by the Board of Supervisors in December 2022, aligns with the Housing Element to support quality of life for all residents by reducing emissions from personal vehicles through developing balanced neighborhoods and communities that result in shorter car trips, expanded safe walking and biking opportunities, more robust and decarbonized public transit options, and improved internet connectivity. The plan maintains open space and makes us more resilient in the face of increasingly frequent climate disasters. 

Finally, the County will be developing a Master Plan on Aging for older residents currently living through the many different stages of the second half of life. By 2030 it is projected that 25 percent of County residents will be over 65. Ensuring the physical and social resources for those adults, and for younger generations who can expect to live longer lives than their elders, is critical for the sustainability of the County and its unique culture. The Master Plan on Aging will build on the Housing Element and Climate Action and Adaptation Plan to support communities of all ages – family, friends, neighbors, coworkers, and caregivers – surrounding older adults and people with disabilities.