Sonoma County will recover slowly, surely
Expert predicts more of the same until 2011 as job gains are offset by housing woes
Published: Friday, June 11, 2010 at 10:36 a.m.
Last Modified: Friday, June 11, 2010 at 4:13 p.m.
Sonoma County’s economy is primed for recovery, but don’t look for much growth until next year, an economist told business leaders at a conference in Santa Rosa on Friday.
“I think we’ll see a turnaround in 2011,” said Steve Cochrane, managing director at Moody’s Economy.com, which tracks Sonoma County business trends.
There are signs the business climate is improving, but the process will be slow, he said. “It’s not enough to say we’re in recovery, but we’ll be there soon,” Cochrane said.
There should be modest growth in this year’s second half followed by solid gains in 2011, he said.
Hiring has picked up, with Sonoma County adding more than 1,000 jobs between March and April. Consumer spending, business productivity, corporate profits and housing affordability also are on the rise.
But other factors will slow the pace of recovery, Cochrane said. There’s a glut of distressed residential and commercial property. State and local governments are still slashing their budgets, and unemployment remains above 10 percent.
Europe’s credit crisis also has the potential to hurt U.S. exports, including wine.
“This recovery is going to be pretty bumpy,” Cochrane said.
He spoke to about 260 people at the Sonoma County Economic Development Board’s annual economic briefing at the Hyatt Vineyard Creek Hotel in Santa Rosa.
The worst U.S. recession in 70 years probably ended last year, Cochrane said, but its impacts still are being felt.
After two years of steep decline, U.S. payroll employment started to grow in this year’s first quarter. But the unemployment rate won’t drop until the nation’s employers add at least 150,000 jobs a month, he said.
The west still lags in hiring because of its severe housing slump, Cochrane said.
Meanwhile, U.S. consumers are in better shape than they were last year, with savings, net worth and credit health on the mend. “Households are going to be a little more comfortable spending,” he said.
Sonoma County real estate prices will stay flat in the short term, but demand should improve next year as inventories shrink, Cochrane said.
Still, a housing rebound will be thwarted if there’s a sudden increase in new foreclosures, according to the Moody’s report.
Commercial real estate prices, which have fallen faster than residential, will take longer to recover, Cochrane said.
Sonoma County homes are now more affordable than they’ve been in years, which makes the county more attractive to business, he said. Office space and labor costs also are lower than the rest of the Bay Area, giving the county a competitive edge.
“It’s a good place to be in the business cycle right now,” Cochrane said.
The outlook is best for the county’s technology, wine and tourism sectors, according to the Moody’s forecast. Overall, the county’s economy should grow about 3 percent this year and about 5 percent in 2011.
But other factors will slow the pace of recovery, Cochrane said. There's a glut of distressed residential and commercial property, state and local governments are still slashing their budgets, and unemployment remains above 10 percent.
Europe's credit crisis also has the potential to hurt U.S. exports, including wine.
“This recovery is going to be pretty bumpy,” Cochrane said.
He spoke to about 260 people at the Sonoma County Economic Development Board's annual economic briefing at the Hyatt Vineyard Creek Hotel in Santa Rosa.
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