The economic outlook for the North Coast is positive in many respects, Jerry Nickelsburg of the UCLA Anderson Forecast assured Sonoma County leaders Thursday morning. We continue to benefit from steady if not spectacular local growth with full employment and a jobless rate of less than 4 percent. The area also continues to see strong growth in areas ranging from tourism and hospitality to manufactured nondurable goods (think Russian River Brewing Co.’s new 35,000-barrel brewhouse in Windsor).
As for the state as a whole, “we are at record employment levels,” Nickelsburg said.
But there are clouds on the horizon, many of which concern an unpredictable weather system known as Donald Trump.
First, there’s much uncertainty over what will happen with the Affordable Care Act. No state has more at stake than California, which stands to lose roughly $18 billion in federal funding if Congress votes to undo the health care exchanges and the Medicaid expansions. That also means less money for doctors, clinics and hospitals in the area.
One of the biggest unknowns concerns Trump’s immigration policy, Nickelsburg said.
The senior economist reminded those attending the county’s Economic Development Board’s State of the County breakfast in Rohnert Park that one of the best ways to assure the kind of 4 percent or more growth in gross domestic product that Trump is promising is through changes in the labor force. For example, Germany has experienced a healthy increase in GDP primarily because of the massive influx of Syrian refugees there.
But Trump is proposing the opposite, promising to deport millions of undocumented workers who comprise about 50 percent of the agricultural workers in America. In California, the percentage is even higher meaning, such a shift would likely have a slowing effect on the economy.
It’s unclear how the nation would even increase deportations by millions, given that 65 percent of the current federal prosecutions are already related to deportations, he said, and there’s a backlog of half a million cases in the nation.
“It can happen, but it will be expensive,” he said. “And it’s not going to happen right away.”
He noted that if the nation has 5 million fewer workers, it’s going to be difficult to hit the 4 percent GDP growth rate that the president-elect has promised. “It’s kind of like (the arcade game) Whac-a-mole,” he said.
A Trump presidency could bring some positives to California particularly if the president-elect follows through with a pledge to launch the biggest U.S. Navy build-up since the Reagan administration. California, home to seven of the nation’s naval shipyards, would benefit disproportionately.
At the same time, Trump has pledged to take federal funds away from sanctuary cities, of which California has many. Plus, Sonoma County still faces many of its ongoing challenges, including high housing costs. Nickelsburg said it’s unlikely that enough housing will be built anytime soon to make a dent in the state’s affordability problems.
As always, Sonoma County has much going for it, including a high quality of life. People want to live here for a reason. Nonetheless, locals can be forgiven if they start the year with some anxiety. Many uncertainties await — the biggest being the one who will be taking the oath of office one week from today. Until his plans are clear, all outlooks remain foggy.