Area Forecast Turns Brighter

Area Forecast Turns Brighter
By RACHEL RASKIN-ZRIHEN/Times-Herald staff writer
Article Launched: 03/31/2008

The same things that drove the local economy during the boom times are what's dragging it down now and will likely continue doing so for a few more months, according to a new economic forecast.

Jeffrey Michael and Christiadi of the University of the Pacific's business forecasting center said areas like Solano County that experienced a several-years-long building boom are being hard hit by the national economic slowdown. On the other hand, the diversity of the Vallejo area's economy will help mitigate the damage, they said.

"There is a distinct difference between the Bay Area and the Central Valley where construction has fallen off, and it was construction that was the economic driver in the area," said Michael, who heads the university's Eberhardt School of Business. "The areas where the construction boom was hottest are slowing down the most."

The Solano County economy has actually been slowing since the third quarter of 2007, Michael said.

All of California is suffering the effects of the real estate and credit crises, he said. Some areas are just feeling it more than others.

"On the other hand, the Vallejo area has some concentration in some more stable employment sectors like government, education and health," said Christiadi, an analyst for the center. Employment numbers should begin picking up in the final quarter of 2008, he said.

"We expect the economy to rebound in late 2008, and hopefully that will be the end of this crisis," Christiadi said.

The latest state employment statistics seem consistent with the center's finding. According to the Employment Development Department, the unemployment rate in Solano County was 6.1 percent in February. That's down from a revised 6.3 percent in January, but above the year-ago estimate of 5.3 percent, according to the state.

This compares with an unadjusted unemployment rate of 6.1 percent for California and 5.2 percent for the nation during the same period.

Michael and Christiadi said their study suggests the economy will start turning around by the second half of the year, with employment lagging a little behind.

"We probably won't see any large improvement until the beginning of 2009," Michael said. "The (government-issued) rebate checks will help stimulate the economy and we'll start to see an easing of the credit crunch and a stabilizing of the real estate market."

Anyone able to weather the next few months should begin to be able to loosen their proverbial belts by the beginning of 2009, the men said.

"This is definitely a hard hit. A major adjustment is going on," Christiadi said. "But in the long run, the prospects are still excellent for California."

• E-mail Rachel Raskin-Zrihen at RachelZ@thnewsnet.com or call 553-6824.