Wednesday, Jun. 17, 2009

Economically, it stinks to be us

Study: Recession harms valley more than most

WASHINGTON — The recession has slammed Modesto, Stockton and Fresno harder than almost any other metropolitan areas in the country, according to the latest grim accounting.

The three San Joaquin Valley cities rank among the bottom 10 "weakest performing" metro regions nationwide, a Brookings Institution study released today concludes. Plunging house prices, soaring unemployment and viral foreclosures are choking the region more than other parts of the country.

"All metropolitan areas are feeling the effects of this recession, but the distress is not shared equally," report co-author Alan Berube noted.

In March, for instance, Modesto's unemployment rate reached 17.5 percent and Fresno's hit 17 percent, while in the high-tech haven of Provo, Utah, it hovered at 5.1 percent. Stockton house prices fell 30.6 percent since January 2008. In Houston, they have rebounded by 4.7 percent.

Stockton, Modesto and Fresno ranked 93rd, 94th and 95th in the rankings compiled by Brookings' Metropolitan Policy Program. The lowest-ranked city was Detroit, savaged by the loss of manufacturing jobs.

The valley cities are long accustomed to poor showings on similar economic score cards, and the general picture has been painted many times before. Berube cautioned, though, that the latest downturn further impedes perennial turnaround hopes.

"While some areas of the country ... may be emerging from the recession already, people living in metro areas that are now performing weakest economically should prepare themselves for a long recovery period," Berube said.

The region's lawmakers are responding symbolically and legislatively to the crisis that's summed up in the 21-page Brookings report. They are acutely aware of the political dangers posed by sustained voter frustration.

Friday, for instance, the House Financial Services Committee will hold a hearing on the valley's dire economic circumstances. Lawmakers will consider, although not vote on, proposals including one by Reps. Dennis Cardoza, D-Merced, and Jim Costa, D-Fresno, that would establish the valley as an "economic disaster" area eligible for special federal aid.

"We are one step closer to seeing the relief we deserve in the valley," Cardoza declared.

In a slightly different rhetorical vein, Rep. Devin Nunes, R-Visalia, said he will bring more congressional attention to the irrigation water shortages that have aggravated the valley's farm economy. Starting this week, Nunes plans to offer water- related amendments on House spending bills; he conceded that the amendments will lose, but he said he believes they still will serve a purpose.

"We need to draw a clear congressional record of those people who want to cut off water to the valley," Nunes said, adding his belief that congressional Democratic leaders "want the valley killed."

While not addressing the valley's specific water woes, nor the proposals for an "economic disaster" designation, Berube stressed that the region-to-region disparity will complicate the job of "policy-makers seeking to ensure a truly national rising economic tide."

The study, which will be updated every quarter, focuses on the nation's largest metropolitan areas. Collectively, these areas account for two-thirds of the nation's jobs and generate three-fourths of the gross domestic product.

Some of the study's economic indicators are well known, such as the unemployment rate. In Modesto, Stockton and Fresno, analysts noted that unemployment jumped more than 5.9 percentage points.

Other economic indicators are more arcane, although no less depressing. The study, for instance, examines the percentage of mortgaged properties that have been foreclosed upon but didn't sell at auction and so are owned by the lending institution.

In Honolulu, for instance, fewer than one in 1,000 "mortgage-able" properties is owned by the lenders. In Stockton, more than 14 homes in 1,000 are owned by the lenders, and in Modesto more than 13 homes in 1,000 are owned by lenders. The proportion in Fresno is about 6.5 homes per 1,000.

On the Net:

The full report is available at www.brookings.edu.

Bee Washington Bureau reporter Michael Doyle can be reached at mdoyle@mcclatchydc.com or 202-383-0006.