“Mild to no recession to 2020.”
At the North Bay Business Journal’s SSU Economic Outlook Conference on Friday, Robert Eyler, Ph.D., professor of economics and dean of Extended and International Education at Sonoma State University, delivered that forecast before an audience of about 400 people in Rohnert Park.
It was a message with clouds on the horizon, such as loan delinquencies rising, the “failing spread between long- and short-term rates” and “unpredicted price and interest-rate increase.”
In a broad sweep that touched on the national economic picture, as well as the future of the state, Eyler also delivered an assessment on the North Bay’s comeback after the fires. The October blazes destroyed nearly 9,000 buildings — including 6,412 homes — and caused 44 deaths in Sonoma, Napa, Mendocino, Lake and Solano counties.
Economic issues from the fires, including key industries like wine and tourism, remain limited and the regional outlook shows “2018 a year of continued growth” with labor markets continuing to be under pressure.
OF TAXES, STOCKS & JOBS
In looking nationally, he said the federal tax cuts will have a transitory impact on the economy.
“It’s election time, so let’s give people more money.” Eyler said “everyone will gain something” but not as much for the lower to middle wage earners.”
His presentation on the national also touched on the gross domestic product, projected to be 2.8 percent this year but dropping to 2.5 percent in 2019, 2.0 percent in 2020 and 1.7 percent in 2021.
As for the stock market, the Standard & Poor’s 500 index, which was below 800 during the recession, crested at above 2,800 this year. It is to be expected — now with more people getting to retirement age, for example — that “some people are going to cash out” of the market. So, “expect more volatility.”
On the state lavel, he cited research on future job-growth forecasts. The outlook was mostly good news for most categories like professional services (up 14 percent); construction (9 percent); health and education (9 percent); and leisure (9.6 percent).
But the outlook for future farm job growth statewide was not so positive (down 2.6 percent). He said farming continues to be undergoing a wave of mechanization, and how much the legalization of cannabis will also affect the agricultural labor market.
Eyler then zeroed in on North Bay counties, delivering quick takes.
Lake County: After three years of fires, recession is still there.
Marin County: “(A)n oasis of wealth,” where jobs growth continues, cost of living rises, and biotechnology industries flourish and entrepreneurs are rewarded.
Mendocino County: It finds itself in the same boat as Lake County, but its connection to cannabis, with the promise of a legit future, may help.
Solano County: “The best growth is here; it is rising quickly.”
Napa County: “It is the star,” or an “adult Disneyland,” which determined a few years ago to place big bet on tourism.
Sonoma County: It is truly the most diverse of the North Bay counties and now has the big question of how it will recover from the wildfires.
IMPACTS OF THE FIRES
When it came to those fires, which affected “four counties, not just two,” the insurance claims may eventually top $12 billion, and the losses will “shock” property-tax revenue to governments.
Economic impact of the rebuild
- $1 billion in new construction
- 5,270 trade jobs
- $536 million in additional business revenues
- $1 billion in new construction
- 4,860 trade workers
- $428 million in additional business revenues