Jobs coming back to Marin County; inflation worries may be temporary: economist
Growing incomes, declining unemployment, relatively low interest rates to 2023 and subsiding inflation are forecast for the U.S., California and Marin County economies by a prominent area economist Wednesday.
Marin Economic Forum Chief Economist Robert Eyler, also a professor of economics at Sonoma State University, put timelines on some of those key indicators during a Marin Economic Briefing webinar on Wednesday. He predicted 6.5% income growth for 2021 continuing into 2024 and low interest rates through 2023, following the recent inflation rise to 4.99% for the 12 months ending in May.
He raised warning signs of the impact of the COVID-19 variants on the economy nationally and also provided theories on what is causing some workers to choose not to return to work.
California’s economy rebounds
In California, Eyler said jobs growth continues and is forecast to recover by mid- to late 2022. However, he noted that the Los Angeles metro area remains the “key drag” on state numbers, but many counties are back at pre-COVID levels of residential employment, including Napa County.
The Journal reported that Marin’s May unemployment rate had decreased to 4.3%; Sonoma County’s, 5.3%; Napa County, 5.5%; Mendocino County, 5.9%; Lake County, 6.9%; and Solano County, 7.2%. Eyler did not provide current employment data on the other North Bay counties during his presentation.
Hotels, restaurants and event centers are seen as the major factors holding back the state’s economy, but he expects to see these sectors increase recovery momentum starting this summer.
To support his view of a relatively quick recovery, he noted the state Economic Development Department reports it took 71 months to recover the jobs lost in the Great Recession, but California is very close to fully recovering pre-COVID jobs after approximately 17 months, with the lifting of pandemic restrictions June 15.
Eyler acknowledged that inflation is rising. He said gas prices – traditionally not considered part of the core inflation metrics – is the primary culprit but only temporary. While inflation is rising, it was expected with sustained gas price increases pushing total inflation towards the core price index defined as prices paid by consumers for goods and services, he said.
Housing prices are another major driver for regional inflation. Eyler admonished investors to watch bond markets for rising risks and market reactions. The Federal Open Market Committee, the monetary policymaking body of the Federal Reserve System, makes key decisions about interest rates and the growth of the U.S. money supply.
The committee has been striving to keep inflation at the 2% level, but inflation had risen to almost 5% of May 31.
Marin nearly regains jobs lost in the pandemic
As for jobs recovery in Marin County, Eyler said it took 58 months to recover jobs lost in the Great Recession, but this county is already close to being back to its January 2020 employment level. For those who live in Marin, however, he pointed out that this total needs to continue to rebound to ensure local and regional economic recovery.
Another key factor that can delay recovery, he said, is the size of the civilian labor force compared with civilian employment for a county such as Marin compared with all of California.
From May 2019 to May 2021, the Marin civilian labor force was down 7,200 (5.2%) and civilian employment in the county was off by 10,000 (7.4%), according to the state Employment Development Department. At the same time, the civilian labor force statewide lost 293,000 workers (1.5%), and civilian employment fell to 1,014,900 (5.5%).
The May unemployment rate in California was 7.5%.
“The comparison to May 2019 reminds us that recession means lost growth from a benchmark date two years ago,” Eyler added.
Key changes in hiring
When studying labor force dynamics for Marin County and California from April 2020 to May 2021, there a been sustained change in the number of local and statewide residents available for work. Eyler said there are four key reasons why workers leave the labor force:
- People shifting careers and/or seeking education
- Residents leaving the area (now counted somewhere else)
- Those who choose to leave due to discouragement or domestic needs, such as childcare.
Another way at looking at Marin County jobs is to observe the percentage changes between May 2019 and May of this year for 14 groups of employers.
During this time frame, the single largest job positive-growth category was in total farm employment (33.3%), followed by transportation and warehousing (7.7%) and construction (0.3%), according to EDD figures Eyler cited.