Supervisor Rabbitt: ‘Recession, thankfully, is behind us’
ROHNERT PARK — Sonoma County is part of a wave of technology and innovation that is lifting the economies of coastal California cities above those of many areas of the U.S., a UCLA economist told several hundred local professionals recently.
Entrepreneurs as a percentage of total Sonoma County jobs has doubled in the last five years and is similar to what has been seen in San Francisco, Silicon Valley, Los Angeles and San Diego, according to Jerry Nickelsberg, PhD, senior economist for the UCLA Anderson Forecast.
“It’s a much brighter outlook for Sonoma County than most parts of the U.S.,” Dr. Nickelsberg said to about 450 business leaders and public officials at Sonoma County Economic Development Board’s annual State of the County, held at Doubletree Hotel in Rohnert Park.
The U.S. economy is “plodding” along like a large, slow-moving elephant, he said. The good news is that the gross domestic product growth has ramped up to around 3 percent going on five years after the economic recession, yet 3 percent growth is just average of upswings and downswings, he added.
With U.S. consumers, who account for 70 percent of GDP, increasing savings to mid-5 percent of income now and projected to move to 6 percent in coming years as aging residents amass savings for retirement.
“It’s not just that consumers are not spending, but we are in a fundamental transformation,” he said. That transformation from industrial to information and innovation is where Sonoma County and the Bay Area is succeeding, he added.
Despite losing 25,000 jobs since 2008 and $10 billion in tax revenue from home foreclosures, the local economy has bounced back, and county government has tightened its fiscal belt to better tackle persistent problems such as deteriorating roads and budget deficits, county Supervisor Mike McGuire told the audience.
“Sonoma County didn’t just survive the recession, but it came out stronger,” Supervisor McGuire said. Steps the county has taken to end up with a $10 million budget surplus this fiscal year and excesses projected for the next five years include renegotiating labor contracts to save $170 million over 10 years.
“Sonoma County’s foundation is strong,” said David Rabbitt, current chairman of the Board of Supervisors. “The recession, thankfully, is behind us.”
Led by technology and innovation, Sonoma County and the rest of the Bay Area are projected to outperform U.S. economic activity as a whole this year and next year, Dr. Nickelsberg said.
“We are shortly going to be at a point in the Bay Area where employment exceeds where it was at the end of the dot-com bubble,” Dr. Nickelsberg said.
With Bay Area job growth offsetting a decade-long “depression” in interior California counties, statewide payroll is projected to increase 1.7 percent in 2013, 1.8 percent in 2014 and 2.5 percent in 2015, he said. Sonoma County’s job growth last year was 2.6 percent, or a net gain of 4,600 positions from 2012, according to state figures released Friday.
Much of the job growth in California as been from contract and temporary employees being hired full time, and it is a good sign that employers are willing to hire employees with which they are familiar, he added.
The widening economic divide between the information- and technology-driven western side of California and the industrial, manufacturing and agricultural eastern side of California is somewhat similar to a transformation in the U.S. economy in recent years, according to Dr. Nickelsberg. Sonoma County is heavily supported by agriculture — the wine business makes up about 60 percent of county gross product. Yet the county now is considered a peer to larger counties to the south in making a transformation to an information-technology economy, he said.
Given past economic cycles of the past 150 years, this transformation likely will be hard on families that need to transition from labor-intensive production businesses to more information-related industries, but the outcome of such cycles is decreasing income equality as overall personal wealth increases, according to Dr. Nickelsberg.
What worries him and other economists is looming inflation and the winding down of an unprecedented level of monetary stimulus from the Federal Reserve in the past five years.
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