A new report finds Monterey County’s economy is strong, but warning signs persist.

Erik Chalhoub here, noting that humans rarely make decisions for rational reasons. We could fix up our older vehicles for much less than the price of a new one, but the allure of something shiny is difficult to resist. We could exercise after work, but maybe our favorite team is playing on TV, and therefore it’s a night on the couch.

Point is, emotion drives decisions, for better or worse.

That’s the message economist Christopher Thornberg of Beacon Economics shared during an event hosted by the Monterey County Business Council on Oct. 10. Whether emotion leads to smart decisions is debatable. So Thornberg spends his time examining data—hard numbers, not social narratives—and has come to the conclusion that things are actually better than many believe, at least when it comes to the economy.

Thornberg's presentation was a follow-up to Beacon Economics’ previous report released last year that showed how Monterey County rebounded from the pandemic. He said data shows what is “actually happening” in the economy, cutting through the often-false narratives found on social media and elsewhere.

So how is Monterey County’s economy looking? Fine, according to Thornberg—for now.

Total employment in Monterey County grew a smidge (0.3 percent) from the third quarter of 2023 to the third quarter of 2024, according to Thornberg’s report, compared to a nearly 1 percent decline over the same period from the previous year.

Average wages grew by 3.4 percent in the county, although trailing the 4.8 percent increase statewide. Small businesses also further cemented their status as the backbone of the economy, growing their employment numbers by 1.4 percent over that year, compared to a 1.1 percent decline in large- and medium-sized businesses in Monterey County, accounting for nearly a third of the workforce.

But while the county’s labor force has increased by nearly 3 percent from July 2024 to July 2025, it’s been on the decline since peaking in February.

Thornberg said the lack of housing is the biggest challenge facing Monterey County’s economy. The population has remained stagnant for the past decade, and if more housing is not built, the economy will remain flat, he said.

“Housing supply is the biggest barrier to growth and success in this economy, period,” he said. “It’s housing, housing, housing. Period.”

Federal policy toward immigrants hurts Monterey County in many ways. In the economic sense, if there are less immigrant workers, that means a contraction of the labor force, especially as the local birth rate continues its downward spiral.

“Immigrants drive the economy forward,” Thornberg said. “If immigrants stop coming, we are perilously close to peak labor force.”

Thornberg said the economy is slowing, as the “sugar rush” of pandemic-era stimulus has faded. But it’s not heading into a recession, despite narratives that say the opposite, according to Thornberg.

Still, nothing is ever certain in this economy, especially as the last decade has taught us.