North Bay leads California in pandemic jobs recovery, economist says

Though it’s still not clear what the full impact on the North Bay economy will come from rising prices and the Ukraine conflict, the six-county region is doing better at getting back on its feet from the pandemic than the rest of California, a local economist said Wednesday.

It took 78 months for the U.S. to get back the jobs lost in the Great Recession starting in 2007, but the country as of December had recovered 99% of positions lost in the faster, sharper hit from the coronavirus pandemic in just less than one-third the time, Sonoma State University economist Robert Eyler said at the North Bay Business Journal’s 29th annual Economic Outlook Conference on Wednesday.

California had nearly 96% of the pre-pandemic jobs back by the end of last year — less than two years, compared with the six-year recovery from the Great Recession — and is projected to get back to pre-COVID levels by summer, Eyler said.

But local counties have done better than that.

“The North Bay in sum has come back faster than the state on average,” Eyler told the audience in the campus student center.

Lake, the smallest of North Bay counties, led the region in job recovery, reaching that in spring 2021 and exceeding pre-pandemic levels for several months. Lake was helped by having a large proportion of jobs deemed essential in the pandemic, and Lake and Solano counties had faster economic recoveries than their neighbors by having fewer local pandemic restrictions, Eyler said.

Napa and Sonoma counties, where the hospitality industry ranks with wine as among the top employers, benefited by shifting tourism marketing early last year to attract back travelers from the Bay Area and Northern California who couldn’t yet travel internationally, the economist said. That’s what helped Wine Country more quickly overcome double-digit percentage losses in jobs over the pandemic than California’s other convention and tourism centers such as Los Angeles and San Francisco, Eyler said.

But lingering losses in statewide jobs in leisure and hospitality and other services is a key problem for California, because those are positions typically filled by low-income and young workers, he said.

“If those jobs don’t come back, we will have a hole in our economy for many years to come,” Eyler said.

And talk in Sacramento of turning the recently dropped statewide mask requirements for COVID-19 into a seasonal rule could change the economics of businesses such as restaurants, hair salons and similar businesses during those periods, he said.

But recovery in tourism is where geopolitics and Golden State economics may intersect. Short-term impacts from the Russia-Ukraine conflict could decrease global travel to Europe, and if that global disruption lasts into summer, travelers may opt for California Wine Country destinations over those on that continent, he said.

On the housing front, North Bay counties have seen big jumps in sale prices over the pandemic, as buyers sought properties farther away from urban areas, Eyler noted. In the past two years, prices grew 38.5% in Lake County, about 32.5% each in Solano and Mendocino counties, 28.2% in Marin, 25.6% in Napa, 18.9% in Sonoma, according to Zillow Research figures.

“Those were not historic highs, but they came after years of recession,” Eyler said. “It’s been an amazin 24 months in housing. The next 12 months, the projection for housing prices is double-digit growth in these counties.”

But Eyler warned that net losses in population for the North Bay may give developers pause when considering housing projects in the region.

“What will it mean for the evolution of California as it gets older, more wealthy and having fewer kids?” Eyler asked.

And for commercial properties, particularly offices, there could be a challenge in getting workers to return after they have become accustomed to operating remotely and perhaps having moved a distance away — or even out of the state.

“One of the things most economists said is that everybody's going to go home for a while by force, but will they come back by their employers’ mandate?” Eyler said. “Because the employer is saying, ‘That's nice that you had your cat on your lap for 18 months, but I think we could be more productive if you come back to the office. And if you don't come back, I'll find somebody who will.”

Despite the global economic shocks and pricing pressures, the outlook does have bright spots, Eyler said. While the Federal Reserve has been signaling increases in its interbank interest rates, which historically filter down to pricing for home and business loans, rates have been at historic lows, and equity markets have had an “amazing” 20-year run in gains, even up 20% from the bottom of the Great Recession, he pointed out.

“The macro context is good. Geopolitical situation, horrific,” he said.

Sonoma State University School of Business & Economics and Exchange Bank were presenting partners for the conference. Ghilotti Construction Company and Redwood Credit Union were gold sponsors, and Kaiser Permanente was a silver sponsor.

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.