Sonoma County’s economy should continue to grow at a sturdy pace this year, spurred on by a recovery in consumer spending that will buoy such sectors as tourism and wine, an economic analyst said Friday.
But even with such good news, the county’s growth will lag behind the country and state because its high-tech and manufacturing industries will contribute less to job growth than in previous cycles, said Steve Cochrane, managing director of Moody’s Analytics. About 1 in 10 local workers, or 20,000 people, are employed in manufacturing.
Cochrane, who spoke Friday at an annual breakfast forum sponsored by the Sonoma County Economic Development Board, said about 90 percent of the movement in Sonoma County’s economy is correlated to the U.S. economy. The local economy’s peaks even exceed the national metrics during boom times, while lows go below that of U.S. averages in a bearish economy.
For example, the county’s 4.2 percent unemployment rate in April was 1.2 points below the U.S. average. He warned there could be labor shortages in the local economy within the next year to 18 months if growth continues.
“As the U.S. economy goes, so goes Sonoma County,” Cochrane said.
With a strengthening labor market, he said, demand for housing will drive employment in construction and private services.
Local policymakers have been grappling with the lack of affordable housing to accommodate the expanding economy. The Sonoma County Board of Supervisors will examine the issue next month in one of its sessions.
Rents are up 30 percent in the past three years in the county, and vacancy rates are hovering at 3 percent. Home construction has not caught up with the growth of the local economy, which is in its third year of recovery, Cochrane said.
“Home building has been fairly flat since then. My guess is that at least some people are feeling a squeeze in terms of the lack of housing right now,” he said.
The future growth for the wine industry and manufacturing will be positive, but more limited, he said.
“The (local) core industries have just been phenomenal in terms of driving the Sonoma labor market,” Cochrane said.
“Consumer demand has been very good for wine.”
High-tech research and development and promotion of the county’s tourism and creative industries (media, the arts, software) will be critical to long-term growth, he added.
“I define it being at the intersection of hospitality and technology — and it seems like a perfect fit for Sonoma County,” Cochrane said.