Recession is ending, but growth will be anemic
“This year will probably be worse, not better,” Sonoma County Supervisor Valerie Brown told 500 business and government leaders Wednesday at the annual "State of the County" breakfast at the Doubletree Hotel in Rohnert Park.
JOHN BURGESS/The Press DemocratPublished: Wednesday, January 20, 2010 at 10:18 a.m.
Last Modified: Wednesday, January 20, 2010 at 4:14 p.m.
The recession may be ending, but don't expect much economic growth in 2010, a UCLA economist told Sonoma County leaders on Wednesday.
“It's going to be a difficult year,” said Jerry Nickelsburg, senior economist with UCLA's Anderson Forecast. “But after that we're going to see some robust growth.”
Unemployment, which surpassed 10 percent in Sonoma County in June, will stay high despite signs the business climate is improving, he said.
Sonoma County's largest job sectors — government, retail, construction and hospitality — will add few positions in 2010, but growth could happen in other areas, Nickelsburg said. With the dollar's value sinking, there's been an uptick in California exports, including wine.
“We're seeing some demand from our trading partners for California goods,” he said.
Nickelsburg spoke to about 500 business and government leaders at the Sonoma County Economic Development Board's 2010 “State of the County” forum at the Doubletree Hotel in Rohnert Park.
The recession actually started in December 2007, but the real damage occurred when U.S. financial markets crashed the following September, he said. Consumers quickly cut back on spending, the largest driver of U.S. economic growth, Nickelsburg said. Layoffs and business closures followed.
Now there's evidence of a turnaround, with the stock market bouncing back and consumers starting to open their wallets, he said.
First-time claims for unemployment benefits are down and manufacturing is on the rise as inventory shrinks. Employers are adding workers, although many are temporary, Nickelsburg said.
Pent-up demand for housing could lead to new construction in California's coastal counties, where home supply is down and prices have started to climb, he said.
But California — and Sonoma County — will grow more slowly than the rest of the country in 2010, mostly because of its ailing public sector.
“More cuts in government are on the way,” he said. “In California, it doesn't feel like a recovery.”
The state's jobless rate will stay high in 2010, but real personal income will grow slightly, Nickelsburg predicted.
Unemployment will start to fall in 2011 and personal income will rise by 2.8 percent, according to his forecast.
In Sonoma County, health care, professional services and business services will be the only sources of near-term job growth.
When California's economy begins expanding again — toward the end of 2010 — it will outpace the U.S., he said.
Still, a recovery could be stalled by inflation, trade disputes or too much government intervention in the economy, he said.
Sonoma County has been hit hard by the recession, said Valerie Brown, chairwoman of the county Board of Supervisors.
“This year will probably be worse, not better,” she said.
But the county will survive because of its diverse economy and leadership in sustainable development, she said. Sonoma County was helped last year by $26 million in federal economic stimulus money, which paid for jobs and public improvements, Brown said.
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