Wednesday, May 19, 2010

Solano County crawls toward recovery

Economist says region depends on its neighbors

By Rachel Raskin-Zrihen / Times-Herald
Posted: 05/19/2010 01:02:33 AM PDT

First one in, last one out.

That's how the head of an economic think tank on Tuesday described Solano County's recession experience.

"Your area's recovery is really dependent on the vigor of the recovery in the neighboring areas," said the director of the Eberhardt School of Business Forecasting Center, Jeffrey Michael. "But we're already seeing early signs of recovery in the South Bay, and we think the next area to see significant recovery will be San Francisco, and then it should move inland."

Being mostly in a commuter area, Solano County's economic health is strongly tied to jobs in the East Bay and San Francisco, Michael said.

The East Bay has fared especially poorly in the recession, and the recent closure of Fremont's New United Motor Manufacturing, Inc. (NUMMI) plant has not helped, he added.

"You're heavily connected to housing and dependent on local government employment, which is not a good place to be," he said.

But the Vallejo area's economic forecast remains fairly flat compared to last quarter, with no dramatic changes either way, Michael said.

"Like a lot of areas, Solano is searching for the bottom," Michael said. "The area fell into the recession about a year earlier than most of the rest of the region, and it looks like it's lagging behind in the recovery."

Southern California and Silicon Valley are seeing the strongest signs of recovery, he said. But as San Francisco's recovery gains traction, it "will spill over into Vallejo, by the end of this year, the beginning of next year," he said.

Personal income in Solano County is expected to grow strongly -- to 3.4 percent as the economy recovers next year, according to the center -- an economic think tank affiliated with the University of the Pacific. Center officials predict the Vallejo area will continue slowly shedding jobs for the rest of this year, but job growth should return in 2011 at about 2 percent, after 17 consecutive quarters of job losses.

"Economic recovery will translate into job growth starting the fourth quarter of 2010, as employers in manufacturing, professional and business services, and trade, transportation and utilities add jobs," according to the center's study. "But not enough to offset losses in other sectors."

The forecast suggests job growth in Solano County will take hold in earnest the first quarter of next year and continue in 2012 at a nearly 4 percent rate.

The area's population will increase only slightly this year, and growth is expected to remain under 1 percent annually through 2015, according to the forecast.

Unemployment in the area is ex-pected to drop from more than 12 percent, to 10.6 percent next year. It is forecast to reach 9.2 percent in 2012.

Contact staff writer Rachel Raskin-Zrihen at (707) 553-6824 or