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Sonoma County is lagging behind the California economy, but there are signs of improvement, an economist told about 400 government and business leaders Friday morning.

"The California economy is ahead of the curve. Sonoma is going to start feeling that over the next year or so," said Chris Thornberg, a founding partner of Beacon Economics.

"I guarantee by the time I come back here next year to give this speech, you're going to be happier folks in this room. Not a lot happier, but happier," he said.

Thornberg was one of the first to predict the housing market crash and subsequent recession. And on Friday, he was optimistic about the state of the economic recovery.

He noted that in Sonoma County, industrial, office and retail vacancies are starting to fall, a sign of economic improvement.

"Things ain't that bad, which is obviously a big change for me," Thornberg said. "I came here seven years ago, and I was grouching about consumers, and grouching about how we were going to go through some tough times.

"In the last six months, I find myself in a completely different position."

In California, exports grew 30 percent in 2011, compared to the same period last year, with exports to Mexico leading the way.

Thornberg said he does not believe the country is heading into a double-dip recession, because the data doesn't substantiate that claim.

"I don't want to completely dismiss those who continue to talk about the pain in the U.S. economy, because...as far as a recovery goes, this is a lousy one," Thornberg said.

He said reports of weak consumer confidence don't reflect anything but nonsense, and a better way to view the economic health of a consumer is through credit card delinquency rates.

"Credit card delinquencies are at the lowest level ever in the U.S. economy right now," Thornberg said. "The American consumer, just fine."

And the recent stock market losses should not be overblown.

"The stock market is the 13-year-old daughter of the economy," Thornberg said. "It's the ultimate drama queen. It overreacts to everything."

Even so, there were indicators of lingering economic pain locally. Jobs in Sonoma County grew by 0.6 percent from September 2010 until September 2011, compared to a growth rate of 1.8 percent statewide. By contrast, San Jose saw a higher rate of job growth at 3.1 percent.

The job categories that grew the most locally from Sept. 2010 through Sept. 2011 were management, construction and durable manufacturing. Real estate, federal government and finance jobs declined the most.

Hotel occupancy rate grew 6.5 percent in Sonoma County, a higher rate than that in Napa, which grew only 2.7 percent. But daily hotel rates and the amount they rose were lower in Sonoma County than Napa.

Some of the solutions Thornberg recommended for the remaining economic issues were controversial.

In the case of foreclosure, Thornberg said the number of foreclosed properties continues to stay flat, and the percent of seriously delinquent mortgages has fallen.

"The answer shouldn't be how can we help them stay in their homes. The answer is how can we help them be foreclosed on," Thornberg said to surprised laughter from the crowd. "The worst policy decision for that family is to keep them in that financial hole."

Thornberg disagreed with the notion that high home prices are intrinsically good, and that people should view homes as investments.

"Please explain to me why a high price of putting a roof over your head...is a good thing," Thornberg said. "We need to wean ourselves off the idea that a house is an investment."

That philosophy was not embraced by all in the real estate community. John Duran, president of the Santa Rosa chapter of the North Bay Association of Realtors, did not attend the talk, but said he has heard Thornberg speak on the topic before.

"Throwing people out of their homes, all that does is reinforce the idea that there's no value in home ownership," Duran said. "And that it's better just to rip the band-aid off all at once than it is to work with families."

American consumers are overspending, Thornberg said, and encouraging them to spend more through tax breaks won't necessarily help because shoppers largely buy products manufactured in China.

Also, Thornberg questioned whether there would be meaningful financial reform.

"The failure of MF Global is a sign that things are still out of control," he said.