Economic outlooks from both California State University, Stanislaus, and University of the Pacific predicted slow, steady economic growth in the San Joaquin Valley during the next two years, with particular expansion in the health and education fields.
While the tone of the study from CSU Stanislaus was more optimistic than UOP’s third-quarter California and Metro Study, a large part of the predictions regarding the San Joaquin Valley was similar in both reports.
“There will be very gradual improvement,” said Gökçe Soydemir, CSU Stanislaus’ Foster Farms-endowed professor of economics. “It’s not as fast as one would like, but we’re going to avoid another recession.”
CSU Stanislaus’ Business Forecast Report for the San Joaquin Valley indicates that business has been gradually on the mend since 2009 in the fields of transportation and utilities, wholesale trade, nondurable goods such as food and clothing, manufacturing, education and health. In addition, investors have noted that the region’s underused land, labor and capital offer many opportunities in education and health services, manufacturing, transportation and logistics, and information technology, the report states.
The UOP report anticipates potential growth within the county next year in the fields of leisure and hospitality; education and health; professional and business services; and trade, transportation and utilities. That report looks at various individual metropolitan areas, including Stanislaus County.
The report anticipates 0.3 percent growth in nonfarm employment next year, followed by 1.5 percent growth in 2013 and 1.9 percent growth the year after that. However, the report anticipates the unemployment rate will rise from 16.9 percent in 2011 to 17.2 percent next year, indicating that the addition of new jobs will not keep pace with the growing potential workforce.
The housing market in the San Joaquin Valley is likely to continue to struggle in the next couple of years, with prices anticipated to drop 2.7 percent in 2012 and another 0.6 percent in 2013, according to the CSU Stanislaus study. Construction jobs are expected to decline by 2.1 percent and 1.9 percent during those years, respectively, that report indicated.
The UOP report, on the other hand, had a more optimistic outlook for Stanislaus County alone, anticipating that the county would add 100 construction and mining jobs next year, totaling 5,600, followed by 300 more jobs in 2013. In all, the report anticipated 7,500 such jobs by 2015.
If the gross domestic product continues to rise steadily as expected, and the Federal Reserve keeps its promise to not raise interest rates until 2013, then all bodes well for the San Joaquin Valley, according to the CSU Stanislaus report.
Still, the Central Valley will continue to lag behind the coastal regions of the state, according to both the universities’ reports.
“One reason this region is lagging is there is not much science and technology in the Central Valley,” explained Jeffrey Michael, director of UOP’s Business Forecasting Center. “Some of the segments (of the economy) that show the greatest amount of recovery in California don’t have large employment in this region.”
Bill Bassitt, CEO of the Alliance, an economic development agency that aims to promote business within Stanislaus County, attributed much of the Central Valley’s economic growth in the past decade to the construction industry. While he stressed that he is not an economist, he said he saw few reasons to be optimistic about that industry anytime soon.
“I’m not pessimistic, I’m just trying to be a realist,” Bassitt said. “There is no panacea. There is no magic bullet. … It will take a lot of hard work to get those paychecks flowing again.”
Bassitt acknowledged growth potential in fields such as health care and higher education, but he said few people in the Central Valley are qualified for those careers.
“It’s difficult to cross-train someone who drywalls for a living to do X-rays,” he said. “That’s not going to be a huge aspect of the economy.”
That’s not to say there aren’t bright spots, Bassitt said.
Agriculture remains strong in the Central Valley, and he predicted that would not change. In addition, he noted that Patterson’s industrial areas have done well, attracting businesses such as the 820,000-square-foot W.W. Grainger logistics center to town.
In fact, Patterson City Manager Rod Butler said he was cautiously optimistic about 2012, due to recent conversations with developers and business park representatives.
He noted that Kiper Homes has already attracted interest in three homes it is building this year within the Patterson Gardens development in the southwest part of town, and he has heard from other developers, too. Those include a company looking to develop an adult-living community for men and women age 55 and older, as well as a condominium builder and builders of low-density homes. Local business parks have also received inquiries from well-known logistics companies in the same vein as Grainger, Butler said. In addition, he expects that construction of a Walmart supercenter on Sperry and Ward avenues will generate interest from other retailers when it opens late next year.
Bassitt, who also hoped to attract more direct foreign investment with the opening of the proposed West Park industrial project in Crows Landing, said Patterson has ample business park space, roads in place and a city staff prepared to meet the demands of interested businesses.
“Good follows good,” Bassitt said. “Word gets around that Patterson is an easy place to do business with.”
• Contact Jonathan Partridge at 892-6187 or firstname.lastname@example.org.