Data reveal pandemic’s hit to California Wine County economies, but ‘bounce back’ underway

The North Bay economy slumped in the first year of the pandemic, according to the recently released federal figures. But the region is expected to see a rebound in the second year, as the hard-hit travel and hospitality industry recovers.

The gross domestic product for all six North Bay counties slipped 2.1% to $92.1 billion in 2020 from the year before, according to the the latest data from the Bureau of Labor Statistics. And that’s after around 5% annual growth in 2018 and 2019 for that metric of economic output.

GDP is an estimate of the value of goods and services produced in an area. This metric is used to compare the health of county, state and national economies.

While GDP for Solano and Lake counties were virtually unchanged in 2020 at $24.02 billion and $1.88 billion, respectively, Napa County fell 5.2% to $9.48 billion from 2019; Sonoma County dropped 3.8% to $26.6 billion; Mendocino decreased 3.3% to $3.19 billion; and Marin slipped 1.1% to $26.9 billion.

"It played out as we expected,“ said Robert Eyler, a Sonoma State University economist. ”A lot of what we see there was productivity loss in certain industries as 2020 played out."

Changes in employment are a key factor in government estimates of GDP, Eyler said. And the sector that suffered the most job losses was arts, entertainment, recreation, accommodation and food services, which includes hotels, restaurants and similar venues that were deemed “nonessential” under state and county public health orders intended to control the pandemic.

That sector is one among the top employers in Napa and Sonoma counties. Employment at those businesses fell 3% in Napa County in 2020 from 2019, 1.76% in Sonoma County and 2.41% in Marin County.

Restrictions on international travel and a falloff on domestic tourism reflected in why Sonoma and Napa counties were suffered economically, while Marin County ebbed slightly and Solano County was virtually unchanged, according to Eyler.

But construction was another business sector that was hit in every county in 2020 with the shelter orders in the opening weeks of the pandemic, the economist pointed out. Solano construction employment was down the most in 2020 from 2019, off by 1%. In Napa, it decreased 0.63%; in Sonoma, 0.57%; in Lake, 0.26%; and in Mendocino 0.13%.

“If you turn off construction for six or eight weeks, and then turn it back on, with the year before it, which was booming, it's going to look a little bit lower,” Eyler said.

Another drag on Napa County’s economy in 2020 was the Hennessey and Glass fires, the later of which in particular cut short the wine grape harvest. The result was a 49% drop in the value of that year’s grape crop, the county’s largest agricultural product, to $461 million.

And that year, Napa County employment in production of nondurable goods — which locally is namely wine — had the second-biggest drop for the year, down just over 1% from 2019.

Local economies rebound

When GDP estimates for last year are released, North Bay county economies likely will look far better than they did in 2020, Eyler said.

“If you think about the six North Bay counties, there's generally been a bounce back across the board,” he said.

With some seasonal adjustment to the latest state employment figures, Lake County regained and exceeded employment lost to the pandemic this past summer, while Napa, Marin and Solano counties are almost back to pre-pandemic employment levels, Eyler said. Mendocino County has job growth but continues to lag behind 2019 levels, and Sonoma County is trailing further.

“It is not shocking, in that Sonoma County has a little bit more risk exposure to leisure and hospitality, and other industries that have that sagged — specifically, a bunch of personal services–style industries like hair salons, nail salons that haven't quite bounced back yet versus Napa,” Eyler said.

What’s also helping Napa County bounce back faster than Sonoma County and other tourism-dependent areas of the state is that as travelers have come back they've been heavily supporting local brick-and-mortar retail more than has the local population, according to Eyler, who has analyzed the local economy for county officials.

Jeff Quackenbush covers wine, construction and real estate. Before the Business Journal, he wrote for Bay City News Service in San Francisco. He has a degree from Walla Walla University. Reach him at jquackenbush@busjrnl.com or 707-521-4256.