Sonoma County economy not expected to fully recover until 2023

When you walk or drive around Sonoma County, you immediately can see life has improved.

People are mingling freely in public, even smiling and laughing, and many are not wearing masks. Yes, as you’ve probably realized, we have started the recovery — physically, mentally and economically.

The latest evidence this hard-earned economic rebound is underway was the June 18 release of Sonoma County’s unemployment report for May. Joblessness dropped to 5.3% of the workforce, the lowest mark since the worst of the coronavirus pandemic last year.

With the jolt of energy and infusion of hope, you’re probably wondering when will the local economy regain its pre-pandemic strength and return to those heady days that seem so long ago?

It was in March 2020, when the highly contagious virus descended on us and obliterated business and industry, closing the doors on an estimated 140 businesses locally, according to state labor market data. Many of the 19,930 establishments left are bruised.

To digress for a minute, there is a silver lining already part of this early stage recovery: residents, young and old, are again taking risks to start new businesses.

One of them is Sonoma’s Tessa Hope Morgan, 22, who has gotten out of the gate with her interior design business she’s calling Hope and Home.

Now mostly through word of mouth, she’s selling her interior design services to select clients locally. She mainly offers three sets of services, ranging from a few hours of her “professional eye” for clients who want to redo a room in a home to a full-service redesign from scratch of a house or apartment, including color matching and sourcing materials.

Soon she plans to have a website and presence on social media channels to market and showcase her work.

“It’s all me right now,” Morgan said of her solo operation, “which has been an amazing learning experience. I’m loving being a small business owner and being creative.”

Like many people, she changed directions after self-reflection in the pandemic. A former nanny, Morgan had spent two years at Santa Rosa Junior College studying early childhood development with a career goal of becoming a teacher.

Back to the nuts and bolts of this improving local economy. So how will we know when it’s running smoothly in peak condition?

I phoned Sonoma State University economics professor Robert Eyler, a close watcher of the area economy, to check.

Restoring the amount of economic capacity — meaning the employment level and value of goods and services produced locally — the county had prior to the pandemic is going to take at least another year.

“It’ll take until 2023 to recover the lost economic capacity,” Eyler told me. He hedged: that’s of course assuming there’s no resurgence of a virus strain like the threatening delta variant that prompts government officials to again restrict or temporarily shutter businesses.

Before we go on, quick tally, based on the economist’s research, of what the local economy has lost and needs to regain to complete its comeback: about 20,000 jobs; $1.5 billion in wages and salaries; $328 million in local and state tax revenues; and a grand total of $6.15 billion of gross regional product. That big number — you read it correctly, billions of dollars — is the overall value of goods and services produced countywide that the coronavirus wiped out last year.

Now it should be easier to understand why a rebound won’t occur overnight. Be patient because it’s going to be a slow ride to what Eyler referred to, in economic parlance, as the “steady state.” That calmness, he said, likely won’t prevail until the middle or end of 2023.

What will the local economy look like then?

Unemployment will be below 3.5% and all economic markets will be fully functional. “That’s kind of where we were in 2020 before everything went crazy,” he said.

As the recovery picks up momentum in summer and fall, there are some obstacles consumers and businesses should keep in mind.

Despite about 20,000 fewer people working here, many business sectors still are bedeviled by an inability to fill jobs, which means they can’t resume full operations and maximize revenue. The staffing crunch goes beyond restaurants and hotels, although many of them remain desperate for new hires. Until they can increase their payrolls, expect to see some of your favorite restaurants, cafes and coffee shops to continue operating fewer hours.

If it’s any consolation, Sonoma County is far from alone experiencing the hiring dilemma. Jay Denton, chief analyst with ThinkWhy, a Dallas firm that sells companies talent management software and data analytics, said there are a record 9.3 million job openings nationwide.

“Employers can’t fill roles quick enough,” Denton said, and still more people who’ve proven they were productive working at home in the pandemic will exit companies in the coming months — unless they can continue flexible working arrangements.

Oh, and you’ve probably noticed there’s this menacing inflation thing that’s joined this recovery. That’s the rocket boost on prices of food, gas, building products and much more.

Prices keep inflating because goods producers shut down or severely limited around the globe need to fully wind up production to catch up to the strong consumer demand. Economists don’t expect that to occur until early or mid-2022.

“This is classic post-recession craziness,” Eyler said.

Send your tips and ideas as this column chronicles the local economic recovery to paul.bomberger@pressdemocrat.com. Call or text 215-237-4448. Or you can message @BiznewsPaulB on Twitter.

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