The near-term forecast for the local economy is bright, economist Robert Eyler told a standing-room-only crowd at the new Sonoma State University Student Center on Wednesday.
Housing prices will continue to rise this year, roughly 6 to 8 percent. Job growth will continue as well, he said. The tourism and agriculture industries will continue to thrive. There's even a positive outlook for commercial real estate.
In fact, regional indicators suggest positive trends for all six North Bay counties including Lake, Marin, Mendocino, Napa and Solano as well as Sonoma, Eyler told those gathered at the annual SSU Economic Outlook Conference.
But there are clouds on the horizon. Concerns of rising interest rates and inflation continue, Eyler said.
And there are some significant unknowns, such as the long-term effects of a drought in California. That could have a "domino effect" on the economy going forward, Eyler said, changing the dynamics of agriculture, housing, food prices and, eventually, hiring. The effects of a prolonged drought could "linger for years to come in terms of decision-making," he said.
Other uncertainties concern the state's political environment, the potential for tax increases and other measures that could further undermine California's efforts to be known as business friendly. If so, Eyler noted, "Silicon Valley could be moving west in the next generation," with companies continuing to move production offshore while keeping corporate headquarters — and the homes of company executives — in California.
"We have to be careful not to provide economic reasons for those companies to move in full," he said.
The North Bay also needs to confront the realities of its changing demographics, including a rapidly aging population. The average age of Marin County residents, for example, has risen six years in the past decade to 45, making Marin the most quickly aging county in the state. This will have a significant impact on everything from the quality of the labor force and housing to commute patterns, Eyler said. As housing costs climb, the changes also present challenges for how to hold onto younger residents.
"We not only need to think about being business friendly," said Eyler, "we also have to think about being resident friendly."
Overall, it was a positive report for the North Coast economy. But long-term challenges remain. Sonoma County, as with the rest of the Bay Area, needs innovation, needs entrepreneurs and needs an education system that will ensure local businesses have access to an educated, skilled work force.
Unfortunately, the county is not there yet. The area suffers from the oddity of having a relatively high number of underemployed and unemployed residents while also having a shortage of skilled labor to fill the positions that are available.
There's little that can be done to prevent a drought. But the shortage of qualified workers is a man-made problem, and it's fixable — if locals are willing to invest in making it happen.