Path toward ‘historic norm’
SONOMA COUNTY — Boosted by wine, tourism and a growing medical device sector, Sonoma County’s economy enters 2013 with “new positive momentum” and is expected to outpace the state and national averages for job growth next year, according to a quarterly economic report prepared by the Sonoma County Economic Development Board.
While headwinds remain, including sluggish demand for new home construction, the report draws a positive ascent for the county’s economy after a period that saw unemployment as high as 10.4 percent in 2010.
“We’re getting back to our historic norm,” said Ben Stone, director of the Economic Development Board. “People three to four years ago thought they’d never see that again. We’re seeing a gradual recovery, and we’ll see it keep growing.”
Unemployment in the county will drop to 8 percent by the end of 2013 and average 5.4 percent by 2016, according to the Fall 2012 Local Economic Report. Personal incomes, which were hit by a 7.1 percent decline in 2009, will continue to climb, with a 5.2 percent increase expected in 2013.
Existing home prices, currently averaging $344,200, are expected to increase to more than $355,000 this year and nearly $468,000 by 2016, according to the report. There were 388 single-family construction permits and 202 multifamily permits in 2012, with nearly 700 single-family permits and over 400 multifamily permits anticipated in 2013.
With inventory dwindling for single-family homes in Sonoma County, new construction for those homes is expected to accelerate in the coming years: 1,500 permits in 2014, 1,700 in 2015 and 1,500 in 2016. Multifamily construction will generally be level with 2013′s bump for the next few years.
The county’s gross metro product, a measure of all goods and services produced over one year, will climb 3.1 percent and reach $23.2 billion by 2016.
Standing out amid that overall gain are the wine, tourism and medical technology sectors.
With a record harvest, growing demand and stabilizing prices for wines priced above $10 a bottle, the Sonoma County wine industry is expected to be a strong performer in 2013 and beyond.
“The wine industry and ag in general look like growth industries for the next few years. Asian consumption is rising, and their need for food may open more markets for local niche producers,” said Dr. Robert Eyler, director of the Center for Regional economic Analysis at Sonoma State University.
A strengthening national economy will help lift tourism in 2013. Passenger volume at the Charles M. Schulz-Sonoma County Airport reached record levels this year, and hotel occupancy rates reached their highest level since 2005, according to the report.
“There are economic ties between tourism and food, restaurants and wine,” Dr. Eyler said, calling for efforts to market those connections to visitors and locals alike.
The report describes a mixed story for technology in general. Agilent Technologies’ Sonoma County-based electronic measurements division, for example, saw lowered demand in economically strained Europe and Asia that offset gains in the United States, leading to a 4 percent year-over-year decrease in revenue from the quarter ending in July.
Yet for Medtronic’s Sonoma County-based vascular unit, aging populations and increased access to health care both nationally and abroad helped fuel a 12 percent climb in sales for the fiscal year that ended in April. The report said that increased access to health care made possible under the Affordable Care Act will further increase the pool of potential customers, though a new tax on medical device makers could temper those gains.
Promoting new connections between thriving sectors and overlapping industries could serve as a powerful catalyst for further economic growth, said Carolyn Stark, executive director of the Sonoma County BEST economic development initiative. She welcomed the data from the report and noted other strong sectors in the county, including a high density of specialty food and beverage manufacturers.
BEST will facilitate a first-ever industry meeting of leaders from the county’s specialty food and beverage sector in February, with hopes that companies can share common strategies from their respective niche. The meeting, the first of others planned under BEST, could also highlight related industries that could serve those companies and thus broaden the sector’s economic impact.
“To have a sustainable economy in the North Bay — meaning we can weather downturns — we need to have a diverse economy,” she said.
Sonoma County’s economic growth is helped by a strong technology sector and a highly educated workforce, but faces high office vacancies and high costs as a deterrent compared to other regions, according to the report.
The report was prepared for the development organization and the Sonoma County Workforce Investment Board by Moody’s Analytics. Moody’s most recently gave the county a credit rating of Aa1, the second-highest ranking possible, in April 2010.
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