But challenges remain for housing, jobs and government
SANTA ROSA – The State of Sonoma County Report to the Community Jan. 20 recapped the causes of the deepest economic downturn since the Great Depression and previewed signs of recovery.
Sponsored by the Sonoma County Economic Development Board, UCLA Anderson Forecast Senior Economist Jerry Nickelsburg delivered a frank assessment of where the U.S. and California are today, and offered a positive, but cautious, forecast of better times ahead.
For California, Mr. Nickelsburg sees payroll job losses in the private sector as declining. “Today, most private sectors are no longer losing jobs,” he said, noting however that public-sector job cuts are likely to increase.
Home prices and the health of the housing market continue to be major concerns for most California property owners and Realtors.
An assessment of California Federal Housing Finance Agency and Case Shiller purchase histories confirms a bottoming of home prices. Mr. Nickelsburg cited continuing average home value appreciation in the state for more than 26 years from 1976 to 2002. He believes that this trend will continue at some point in the future.
His optimism is based on the fact that the inventory of California homes for sale remains low and continues to fall when compared with inventories of homes for sale per household statewide, as well as inventories in other western, mid-western and eastern states.
Referring to international trade, he said: “California exports are showing a pulse,” with outbound seaport traffic and international air cargo tons loaded moving up. However, imports remain flatlined.
“There is evidence that construction permits have stabilized, indicating that this sector is poised for growth. The same is true for manufacturing, with signs of increased export demand and declining job losses. But, the trade and retail sectors await a recovery that will only come with increased consumer demand. In the public sector, more contraction is still to come,” he said.
Mr. Nickelsburg predicted “a hybrid recovery” with the unemployment rate staying within an estimated range of 10.8 percent and 12 percent over the next 24 months, while real personal income is expected to increase to above the 4 percent level in 2010.
During this same period, he foresees payroll employment moving up from -0.3 percent this year to +1.5 percent in 2011.
In Sonoma County, government and retail sectors are likely to contract in 2010 as construction, hospitality and manufacturing jobs remain flat.
Mr. Nickelsburg believes that health care along with the professional and business services sectors are the major sources of near-term growth in the county.
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