California’s economic recovery, until recently a creature of the coast, will begin hitting its stride throughout much of the Central Valley this year, according to a new forecast released Thursday.
The quarterly forecast from the University of the Pacific said Sacramento and many other Central Valley communities will enjoy growth rates exceeding the statewide average over the next four years.
The growth won’t be extraordinary, and the Central Valley economy won’t be nearly as strong as the Bay Area’s. But UOP economist Jeff Michael, who oversees the university’s economic forecasts, said job growth rates will be more robust in most Valley communities than the state as a whole.
“It’s the recovery moving inland,” said Michael, director of UOP’s Business Forecasting Center. “Some of the big negatives are going away.”
Sacramento’s unemployment rate fell to 7.6 percent in December but averaged 8.7 percent for all of 2013. The forecast said the rate will fall to an average of 8.1 percent this year and 7.3 percent next year. By 2017, it will drop to an annual average of 5.7 percent.
Michael’s forecast says job growth in Sacramento will improve to 2.1 percent this year, up from 1.6 percent in 2013. Statewide job growth for 2014 should come to 1.6 percent. Job growth in Stockton, Modesto and Merced will also exceed the statewide average this year.
The Fresno area will continue to lag the recovery, however. A big reason is the drought. Job growth will average just 1.3 percent this year.
Michael said much of the Central Valley is probably already outpacing the state in job growth. The latest unemployment statistics don’t show it, but Michael said he believes revisions in the data scheduled to be released in March will bear that out.
He said the improved state budget picture is shoring up incomes in the Sacramento area. New Amazon.com distribution centers in Patterson and Tracy are bringing thousands of jobs to the northern San Joaquin Valley, he added.
Throughout much of the Valley, the housing market has shored up, thanks in part to the influx of investors buying under-priced properties and raising median values sharply. “The under-priced housing was keeping the foreclosure crisis and the underwater problem going,” he said.
One disappointment: Housing construction hasn’t rebounded nearly as quickly as pricing. In Sacramento, for instance, construction employment fell in half when the market collapsed and has barely budged upward since the recovery began. Michael said he believes hiring will pick up this year, but not dramatically.
Another factor in the Valley’s recovery: The Bay Area is starting to bump up against its usual growth constraints – geographical limits and overheated housing prices. That’s driving some residents and jobs inland, he said.
Call The Bee’s Dale Kasler, (916) 321-1066. Follow him on Twitter @dakasler.