North Bay Region:

Region’s Economic Fundamentals Remain Solid in a Shaky World

While it’s very possible a recession may not hit the North Bay Region’s economy until 2021 or 2022, local leaders remain on the alert in a world rocked by financial market volatility, the Coronavirus pandemic, and other issues. Still, the region’s fundamentals remain solid for supporting a continued, moderate expansion.

That’s according to the most recent forecast presented and published by a leading economist at Sonoma State University. The keynote speaker’s opinions spotlight intriguing viewpoints, trends and projections so your credit union can plan appropriately.

North Bay Region
Presented on Feb. 19 by Robert Eyler, economist at Sonoma State University, during the “27th Annual Economic Outlook and Housing Summit” (hosted by the university and the North Bay Business Journal):

While the North Bay Region’s workforce development and business leaders remain on the alert regarding a potential economic contraction, it’s possible they may be waiting even longer than expected. Although the local economy shows no signs of slowing, enough risks are playing out at the state and national levels to provide caution. The situation is delicate even though local businesses and consumers (as well as statewide) could very well carry economic growth into late 2021 or 2022, assisted by continued low unemployment and steady consumer spending. Most importantly, local leaders would do well to foster community spirit across all economic and leadership sectors (private, public and non-profit) to help keep North Bay’s economic growth afloat, if not progress higher. Absent an economic recession, U.S. Gross Domestic Product (GDP) is expected to post 2-percent average annual growth from 2020 – 2023. However, many jobs the economy is creating in certain regions are service jobs (low-wage and low/middle-wage positions), which may have socio-economic consequences later during this decade.

Local economic indicators for the counties of Lake, Mendocino, Solano, Sonoma, Marin and Napa point to continued economic growth, although each county is trending differently. Some counties’ indicators are trending up versus plateauing, or even trending downward (not projecting a recession — just slower growth). Each county’s leading index has ranged between 100 – 107 on the index scale from 2017 – 2019 (versus 83 – 85 during the post-period depths of the Great Recession from 2007 – 2009). Furthermore, each county’s coincident indicators (what actually happened in the local economy) were mostly higher over the same period (between an index range of 104 – 113), showing that the local economy has consistently outperformed forecast indicators over the past few years. For context, local leading indicators include trends in loan default notices, residential and commercial building permits, new unemployment insurance claims, national economic growth, "help wanted" job advertisements, and agricultural prices.

The North Bay Region’s business/industry drivers of economic growth in 2020 will be construction, health care, cannabis, tourism, and wine/food and beverage manufacturing. Rebuilding the community continues after the wildfires of recent years, mainly due to residential developers and builders that are taking the opportunity to do what they do best. “Tele-health” (remote health care services) is expanding into rural areas as local demographics change and the general population ages. The local cannabis industry is continuing to see growth as consolidation brings further changes and talk of “nationalization” in the future heightens (although still an unknown). Tourism still remains very important, although the wildfires have somewhat casted a negative shadow on this sector (it will take positive public relations and marketing efforts to shape regional perception of the area). Additionally, a recent large harvest in the wine/food manufacturing industries are depressing agricultural prices simultaneously with rising competition, as well as retail demographic/marketplace changes (a younger generation not as interested in wine as other beverages). One final big question for the region, like other areas, is: “Side hustles” and related jobs have expanded possibilities and opportunities, but will technology shift how innovation leads to new jobs and the need for worker skills?

Issues for the North Bay Region to keep in mind going forward include: the 2020 presidential election, as well as what will be on the California state ballot (including the commercial property tax split-roll Proposition 13 issue); global issues, including the Coronavirus and delicate global economic recovery; interest rates (whether the Federal Reserve will pause on short-term rates or cut once or twice this year); household and corporate debt levels; and income versus wealth inequality (a generational wealth-transfer coming in the 2020s, but also some reckoning in Social Security, Medicare and the level of U.S. annual deficits and outstanding debt).

View the forecaster’s slideshow presentation: click here to see consumer, household, business and other economic trends in each area of the North Bay Region — the counties of Lake, Mendocino, Solano, Sonoma, Marin and Napa.

Read about the event: view the North Bay Business Journal’s news stories on the conference:

Listen to the entire keynote economic speaker presentation on SoundCloud audio platform (Dr. Robert Eyler of Sonoma State University): click here to listen to “No Recession Before 2023, says Sonoma State University Economist.”

Allen Matkins/UCLA Anderson Forecast
View the latest Allen Matkins/UCLA Anderson Forecast Commercial Real Estate Survey for trends and projections across all local California commercial real estate markets (office, industrial, retail, and multi-family apartments).

Local Home Affordability Vs. Job Growth
The National Association of Realtors recently released a study (“Home Affordability Index Ranking and Payroll Job Growth") showing trends in how local housing affordability can contribute to slower local job growth by employers. View the data table for local metropolitan information in California.

Local Migration and Population Change’s Impact
Within one of Harvard University Joint Center for Housing Studies' latest research endeavors — "Losing Residents but Still Growing” — you can understand how the components of population change differ by county, as well as exactly how each community is evolving and where people are drawn to when they move. As the county-by-county map shows, many large central metro counties are attracting numerous international migrants, while many nearby suburban areas (referred to as “large fringe metros”) are attracting sizable numbers of domestic migrants. Counties in many high-cost metropolitan areas are losing more domestic migrants than they are gaining. Indeed, of the 100 most populous US metros, four of the five with the highest rates of renter cost burdens also have negative domestic migration.

Local County-Level Perspectives
The California Department of Transportation (Caltrans) has released its updated 2019 – 2050 demographic forecast for all counties in California regarding local jobs, wages, home prices, population, personal income, taxable sales, net migration, wildfire issues, public policy implications, legal cannabis, industries, workforce, and more. For forecasting purposes, the shorter-term economic projections for 2019 – 2024 within this annual county-wide report by Caltrans do not factor in an economic recession into its local scenarios. They are only highlights stemming from a baseline projection (view the report above for more information).

North Bay Occupational/Industry Trends
Additionally, download Chmura Economics and Analytics’ latest North Bay Region Economic Overview to see 10-year future trends in worker occupations, employment, wages, cost of living, and industries.

Your Local Region’s GDP: 2001 - 2018
The U.S. Bureau of Economic Analysis has released an overview and history on "Local Area Gross Domestic Product from 2001 - 2018" for individual counties in California and the entire nation. It includes highlights and trend breakdowns for large, medium and small-population size counties, as well as the U.S. dollar size of economies for each county. Tables and files are included for download and review.

Latest CA Population and Demographic Trends
The California Department of Finance has released its latest news — "State's Population Increases by 141,300 While Rate of Growth Continues to Decline" regarding 2018 to 2019 population growth, which includes highlights and snapshot trends of each county and region across the state. (You can also download the long-term 2010 to 2019 demographic tables by clicking here). Also, the department's deeper demographic breakdown (age, race, income, employment, poverty, health care, education, and social/housing characteristics) — courtesy of the American Community Survey by the U.S. Census Bureau — can be found by clicking here.

County Income and Poverty Estimates
The U.S. Census Bureau has released its "Small Area Income and Poverty Estimates (SAIPE) Program", which gives single-year estimates of income and poverty for all counties in California and the entire nation — as well as estimates of school-age children in poverty for all 13,000-plus school districts.

Demographic Profile and Projections: North Bay Region*

  • *(Combined counties of Marin, Sonoma, Napa, Solano, Lake, and Mendocino)
  • Total population: 1.51 million (and will hit 1.6 million by 2025).
  • Working-age individuals (15 - 64 years old): 65 percent of total population in 2015 (and will fall to 61 percent by 2025).
  • Labor force (at least 16 years old who are working/looking for a job): 752,000 out of 1.18 million adult population.
  • Labor force participation rate (adults who “want” to work): 64 percent (or 752,000 individuals).
  • Unemployment rate: 2.9 percent (versus 3.9 in CA and 3.5 in U.S.)
  • Unemployed workers: 21,100.
  • Median household income: $78,000 as of 2019 (compared to $71,800 for CA and $60,400 for U.S.)
  • Poverty rate: 13 percent (versus 15 in CA and 13 in U.S.)
  • Education of population: 41 percent have a college degree; 30 percent some college; 19 percent high school diploma; and 10 percent no high school diploma.
  • Employment sector growth: click the following links for local future growth breakdowns (2014 – 2024) of nonfarm job projections by industry, occupation, education, and fastest-versus-largest areas of importance: Vallejo-Fairfield region; Napa County region; Sonoma County region; Marin County region; and Lake-Mendocino-Del Norte-Humboldt region.
  • * Data as of January 2020 from the California Center for Jobs and the Economy; California Employment Development Department; California Department of Finance; Federal Reserve Bank of St. Louis; U.S. Bureau of Economic Analysis; and U.S. Census Bureau

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