Santa Barbara County will experience a shorter and shallower recession than the rest of the region, the UC Santa Barbara Economic Forecast Project said.

Speaking to 600 business and community leaders April 22, Chris Thornberg and Brad Kemp of Beacon Economics said Santa Barbara County went into recession later than Ventura and San Luis Obispo counties. It has experienced less unemployment than the other two counties and will emerge from the recession at the same time as the balance of the region and state.

“Santa Barbara County is very insulated,” Kemp said. “You haven’t felt the effect of the recession the same as everybody else.”

Although taxable sales in Santa Barbara county have dropped significantly over the past several years — by more than 25 percent from late 2006 to mid-2009 — they experienced an uptick of 5 percent again recently.

Going forward, strengths for the region in recovery will include technology and tourism, the economists said.

The chief reason for Santa Barbara County’s relative health is the slow-growth policies that restrained construction spending and job growth on the South Coast, the economists said.

“If you put major curbs on growth in a boom, you wont’ fall as much when the bust arrives,” Thornberg said in remarks prior to the event, held at the Granada Theatre in Santa Barbara.

Although the recession will linger longer in North Santa Barbara County, its looser development policies give it greater potential for long-term growth than its southern counterpart, the economists said.

Construction has been the hardest hit industry in the region, Kemp said. To make things worse, “those construction jobs lost aren’t going to go back to 2006 levels through the end of our forecast [in 2013].”

Retail trade employment experienced the third largest employment decline in the county — after construction and hospitality — losing more than 2,000 jobs, or 10.2 percent, from the peak. Retail job growth will continue to be slow for the foreseeable future, with employment levels not returning to pre-recession levels until the end of 2013, the forecast said.

Santa Barbara County’s professional and business services industry will also take some time to fully recover. Since 2007, its’ lost almost 1,500 jobs. The sector, heavily dependant on business profits, will make only slow upward gains for a while.

The bigger picture

Nationwide unemployment and consumer spending will continue to lag until the housing market fully recovers, the economist said.

And don’t expect the nation’s business community to get back to pre-recession production and hiring levels until the economy plays itself out, the economists said.

“There are still too many unknowns,” said Peter Rupert, an economics professor at UC Santa Barbara. “The outlook is for a modest recovery.”

“Business is a wildcard right now,” Thornberg agreed.

Instead, the recovery may be a jobless one for some time. “Employers are very risk-averse right now,” Kemp said.

Banks aren’t out of the woods yet, and the commercial real estate market will continue a slow bleed until it bottoms out. Government stimulus policies are creating an artificial – and unsustainable – bubble in some sectors, including a mini bubble in housing, Thornberg said.

“The fundamental problems in the economy are still there. The government has reacted so violently with its policies, but they’re just covering up the problems,” he said. “Yes, the recession is over … [but] what we’ve seen is a recovery created by government policy – and that’s a problem.”

The forecast’s bottom line: The nation’s recovery will be sluggish, aided in large part by government stimulus. Santa Barbara, while stronger than the rest of the region, will only slowly wind its way back to full health.

“Every day of 2010 is going to be better than the day before, even it if doesn’t feel like it every day,” Kemp said. “Be patient.”

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