North Bay:

Return to Normal on Distant Horizon as Economy Recovers

Home to a slice of coastal and inland Northern California — as well as the upper Bay Area — the unique “North Bay” region’s economic recovery continues to come at varying costs (yet new opportunities) to workers, households, and businesses as they return to normal over the next couple of years.

That’s according to the most recent forecast and trends presented by Sonoma State University. These experts’ opinions spotlight intriguing viewpoints and projections so your credit union can plan appropriately.

Sonoma State University
Presented on Feb. 16 by the university’s School of Business and Economics during the “28th Annual Economic Outlook Summit” (co-hosted by the North Bay Business Journal):

The North Bay region’s economy and job market probably won’t see a complete “return to normal” until late 2023 or 2024. Various economic forecasts have the entire state of California’s gross domestic product (GDP) hitting 3.5 – 5 percent in 2021 and unemployment hovering in the 6-percent range as individuals rejoin the labor force (pool of people who are willing and able to work). These projections have positive implications for the counties of Sonoma, Napa, Marin, Lake, Mendocino, and Solano. Locally speaking, early to mid-2021 will feel like a regional economy in transition instead of one in crisis, and by late 2021 the regional economy’s recovery will be on much better footing than it experienced throughout 2020 (assuming the spread of COVID-19 is under more control than recently and today).

The North Bay region’s continuing short-term economic recovery from 2021 – 2022 is a tangled web of business and consumer-growth momentum being capped by restrictions and social distancing policies due to the lingering COVID-19 pandemic. A general recovery has already taken place from mid-2020 into early 2021, but now it needs to get beyond the threat of social constraints to see which businesses can start to reopen (or which ones eventually fail like so many others around them). The first half of 2021 will reveal the speediness of re-hiring by some businesses, which should provide a positive feedback loop in helping slow down continued local initial unemployment insurance claims and continued claims.

The North Bay region’s economic recovery from 2021 – 2022 depends on a variety of business, worker, consumer, societal, governmental and health-related factors. These include the need to reduce COVID-19 virus caseload (in conjunction with the threat of social distancing and business constraints); congressional fiscal stimulus to local households (the amount spent due to pent-up demand versus the amount saved); local investments by corporations and small businesess in trying to get back to normal life; varying job recovery paces in individual counties; travel industry and tourism constraints versus not; puiblic finance challenges on local governments versus forecasted and “real” revenues; education/workforce development remaining a critical focus of local leaders; K-12 and community college reopenings; and housing construction stability (a major bright spot going into 2022).

On the surface, the North Bay region’s economy has already recovered quicker than other regions across the state having much higher concentrations of jobs in leisure, hospitality, tourism, and entertainment — but it really depends on the local county in focus. The fact that these industries only make up so much of the North Bay region’s economy (more so in Marin, Napa, and Sonoma versus less in Lake, Mendocino, and Solano) is assisting the region compared to other areas in the state that have higher concentrations of businesses in these sectors and have been drastically impacted by the COVID-19 recession and slow recovery thereafter due to tight business restrictions and other factors. However, it doesn’t necessarily mean the North Bay is recovering any faster when truly compared to other areas — it just means the economic hole during the 2020 pandemic recession didn’t crater-in as deep, locally speaking.

Long-term residential and commercial rebuilding efforts coming out of past years’ wildfire damage is integral to the North Bay region’s economic recovery in 2021. As the region continues emerging from 2020’s pandemic recession, economic “drivers” such as rebuilding/construction (already in place before the COVID-19 economic slowdown) are even more important to creating a sustained local recovery.

Local unemployment rates across the North Bay region are recovering at varying paces depending on their economies and disruption in the labor force (pool of individuals able and willing to work). Individual unemployment rates (UR) and corresponding percentage declines in employment from December 2019 to December 2020 are as follows: 5.5 percent UR in Marin County (-8 percent employment decline); 6.5 percent UR in Sonoma County (-7.6 percent employment decline); 7.3 percent UR in Napa County (-5.7 percent employment decline); 8.1 percent UR in Mendocino County (-9.7 percent employment decline); 8.8 percent UR in Solano County (-7.3 percent employment decline); and 9 percent UR in Lake County (-4.6 percent employment decline).

County labor force pools in the following counties within the North Bay region (local people who are willing and able to work) have declined during the December 2019 to December 2020 period due to a variety of reasons. The declines are: -3.5 percent in Sonoma County, -1.1 percent in Napa County, -4.6 percent in Marin County, -0.6 percent in Lake County, -5.4 percent in Mendocino County, and -1.7 percent in Solano County. Worker “realignment” into open job positions across the North Bay region is proving difficult. Some businesses are slowly going out of business but haven’t yet done so, and still others have implemented mass worker furloughs while promising to possibly open in the near future. Meanwhile, for certain workers, their skills could transfer to different jobs — but regular federal unemployment financial assistance, extra emergency assistance, and above-and-beyond congressional stimulus aid has made it easier to wait out the current situation going into mid-2021. Also, some workers can go back to work from an employment perspective but they cannot do so due to child-schooling in their household, which is also playing into the labor market situation.

The North Bay’s “K-shaped” jobs recovery since the 2020 pandemic recession gives a good visual of the labor market dynamics impacting the entire region. When the recession hit the local economy in March – April of 2020, year-over-year employment growth for high-wage workers in the region ($60,000/year and more) briefly plunged by -17 percent before “recovering” to -3 percent within a couple of months and remaining there into December 2020 (but still down from its positive 6 percent pre-pandemic annualized growth trajectory). Job growth for middle-wage workers ($27,000 – $60,000/year) initially fell by approximately -25 percent before recovering to -10 percent during the same period. However, for low-wage workers (below $27,000/year) the picture is both nuanced and depressed, with employment growth plunging by -33 percent before plateauing and staying there in some local counties (within the -30 to -35 percent rage) versus getting worse in other local counties (-40 to -45 percent) during the same period.

Although the local labor force and jobs market is a “noisy” picture right now, outstanding employment in Lake and Napa counties (compared to their pre-pandemic levels) are leading the way. As of December 2020, the change in these two counties’ total jobs, respectively, are only -2.7 and -4.4 percent below their pre-pandemic levels in January 2020. Meanwhile, Sonoma County is -5.7 percent, Marin County is -5.7 percent, Solano County is -6.1 percent, and Mendocino County is -7.9 percent. For comparison, the entire North Bay region (combined) during the Great Recession of 2007 to 2009 collectively went from -1 to -4 percent for a very long period before going to zero (fully recovering) in 2014.

While the percentage of jobs lost from December 2019 to December 2020 across North Bay sectors varies depending on the industry and geography, there are certain areas still suppressed more than not in the entire region. They include leisure/hospitality, “other” services, and local/state government. On the flipside, bright spots across the North Bay region are construction (especially in Napa County), retail trade (especially in Solano and Napa counties), professional/business services (espeically in Lake County), and educatonal/health services (espeically in Napa County). Overall, the micro-economy recovering the most in nearly all job industries since the pandemic recession of last year is Lake County due to its deep losses to begin with (faster and more to recoup since it plunged so steep and fast to begin with).

The year-over-year third quarter period from 2019 to 2020 reveals that the North Bay region’s taxable sales growth is surging in the “other retail group” category (50 percent rise), which can include online sales/e-commerce. In addition, other areas doing well are motor vehicle parts and dealerships (6.5 percent), building materials/garden and equipment suppliers (5 percent), home furnishings and appliance stores (1.2 percent), food/beverage merchandise stores (0.8 percent), “all other outlets” (only -3.2 percent decline), and general merchandise stores (only -7 percent decline). Areas still depressed and recovering are clothing/accessories stores (-23 percent), food services/drinking places (-27 percent), and gas stations (-24 percent). Total taxable sales combined (all industries) is -1.6 percent (much better than the year-over-year -17 percent from second quarter 2019 to second quarter 2020).

The median existing home price across the North Bay region is expected to rise at varying 12-month growth levels compared to the entire state from December 2020 to December 2021: 7.2 percent (Sonoma), 7.1 percent (Mendocino), 6.5 percent (Solano), 6.2 percent (Lake), 6 percent (Napa), and 5.9 percent (Marin). Meanwhile, in California the projected average statewide growth rate is 6.2 percent. Looking back a whole two years (2019 and 2020), combined 24-month total growth rates were as follows: 6 percent (Sonoma), 8.3 percent (Solano), 8.5 percent (Marin), 7.8 percent (Napa), 8 percent (Mendocino), and 8.5 percent (Lake).

You can view the entire archived video forecast. Just click here and scroll down to see the “North Bay Showing Signs of Recovery” presentation.

Indeed Hiring Lab’s Bay Area Trends (
Released on Feb. 2 (“The Impact of Coronavirus on U.S. Job Postings”):

U.S. job postings (advertisements for jobs) since the COVID-19 pandemic recession in spring of 2020 are down the most in the greater San Jose, San Francisco, and Honolulu regions. However, job postings have improved significantly since the end of September 2020 in nearly all of the hardest-hit metros. Since February 2020, Honolulu (No.1) has experienced a -25 percent drop in job postings; the San Jose-Sunnyvale-Santa Clara region has seen a -23 percent decrease; and the San Francisco-Oakland-Berkeley area has fallen -22 percent. However, since September 2020 those same regions (respectively) have seen increases in job postings of 9.5 percent, 9 percent, and 11 percent.

Job postings (advertisements for jobs) have rebounded more slowly in metros where a higher share of jobs can be accomplished from home (such as the Bay Area). In high work-from-home metros, postings in retail, restaurant, and personal-services jobs have suffered. Collectively, postings in these metros across the United States are still 13 percent below the pre-pandemic baseline (recovery is slow). On the flipside, metros across the nation with a higher share of in-person service jobs (leisure, hospitality, food accommodation, etc.) are seeing (collectively) their job postings recently hit their pre-pandemic levels since their economies are more dependent on them (and other reasons too).

The COVID-19 pandemic recession from 2020 has especially been a “big-city recession,” especially for regions like the Bay Area. Job postings (advertisements for jobs) remain below baseline in larger (and the largest) metropolitan regions (approximately -10 percent below February 2020 for areas with 2 – 5 million residents). But they are above baseline in medium areas (5 percent above pre-pandemic level for areas with 500,000 – 2 million residents) and small areas (9 percent above pre-pandemic level for areas with less than 500,000 residents).

Caltrans’ County-Level Economic Forecast
Released in December 2020 by Caltrans (the California Department of Transportation):

You can view Caltrans’ economic, demographic, housing, population, job, inflation, and industry breakdown forecasts for each county. Click on the following to view local trends and projections from 2021 – 2025: Mendocino, Lake, Marin, Sonoma, Solano, and Napa. Or you can click here to view any county in California.

Bay Area Small Business Activity
Updated routinely by Homebase, a provider of real-time digital tools for small businesses:

Small business activity across the Bay Area was down at varying amounts compared to pre-COVID levels as of mid-December 2020. In the greater San Francisco area, activity was down -30 to -39 percent depending on the measurement analyzed. In the greater San Jose region, activity was down -24 to -25 percent. Both regions were down between -56 to -74 percent in April 2020 before starting to recover. Measurements include the volume of hours worked by employees, the number of businesses open, and the number of employees actually working. You can click here to learn more and pick your region.

North Bay: Demographics, Labor, Education & Economic Resources

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