Sunday, January 10, 2010

Vallejo area's economic forecast ranges from bleak to optimistic

Posted: 01/08/2010 01:00:13 AM PST
What will become of Vallejo, Solano County and beyond in 2010 will play out over time, but some local experts, psychics and government officials offer predictions ranging from the good to the bad and even the ugly.

Jeff Michael, director of the Eberhardt School of Business at the University of the Pacific, said any search for a silver lining in the state's economy will find little encouragement, especially in Solano County.

"There are more storms to weather in the first half of 2010 before we can focus on recovery," Michael warned.
In September 2005, the Eberhardt center predicted Solano County would lead the region in personal income growth in 2010. Employment in the region was expected to grow steadily as well, particularly in the service and construction sectors.

None of that is expected anymore, Michael said.
Solano County and the Vallejo area, like much of the Central Valley, aren't out of the recession yet, unlike parts of coastal Southern California and parts of the Bay Area," he said.

"Vallejo in particular can expect payroll contractions to continue in the short term." Actually, the area did better than expected job-wise in 2009 because of the opening of several new medical facilities, but that's probably the region's share of a predicted statewide bounce in health care jobs, he said. "And we don't expect much of a lift-off in the construction industry, though we do think that's bottomed out," he said. "Unemployment in the area will likely rise through the winter before tapering off, but we expect it to remain in double digits through 2011. There's not a lot of sunshine in this."

In June, 2008, the center predicted economic slowing in the county through 2010. Continued job losses were predicted in various job sectors, though most were expected to begin seeing job gains as the housing market stabilized this year. The county's population was expected to slowly accelerate through 2010, while unemployment was expected to peak at 7.1 percent in 2009 before retreating to 6.6 percent in 2010.Now, though, Michael said the center's experts think the Vallejo region will be impacted, at least marginally, by the three main negative events expected in the Bay Area in 2010. These include Fremont's NUMMI plant closure expected April 1, continued foreclosures and construction industry depression and a major constriction in state and local government employment, he said.
"We expect significant cutbacks in schools -- layoffs are expected. It's pretty ugly in most places, and it would have been worse in a lot of places if not for the federal stimulus that had a lot of funds for education in it," he said.

If there's a bright side to the center's prediction, it's that overall the recession statewide is easing, and slight growth is expected in the technology, agriculture and tourism sectors, Michael said."With a favorable exchange rate and some Asian economies doing well, we might see some increase in international tourism," he said.