San Joaquin Valley business forecast looking up, says Turlock professor

The San Joaquin Valley has more than regained jobs lost in the recession, and wages are again moving up. But the modestly optimistic outlook favors different industries than those soaring a decade ago, and consumer confidence has been slow to recognize the improvements, finds a new Business Forecast Report.

“Employment has actually passed pre-recession levels a little bit. We caught up last year,” said report lead author Gökce Soydemir, business economics professor at California State University, Stanislaus. As of August, Stanislaus County had the lowest unemployment rate in the valley at 8.5 percent.

That said, he added, the valley is not as well off as it would have been had the recession not happened.

“If the recession had not occurred, the number (of jobs) would have been much higher – about 120,000 ... jobs that should have been there. That’s the lasting impact,” Soydemir said Wednesday.

Job growth in the valley briefly surpassed the state average at the end of 2014, “as would be expected from a regional economy that has plenty of room for growth,” he wrote in the report.

Consumer confidence, that crystal ball of spending decisions, topped the benchmark 100 point this year for the first time since 2007.

Soydemir’s analysis found the drought, which worried business analysts earlier in the year, has had no material effect outside of the agricultural sector. Even within the sector, there has been record crop income.

But lack of water, coupled with shifts toward less labor intensive crops, has lowered farm employment and is raising consumer prices for a range of vegetables and meat.

“The effects of the drought are visible to the eye when you go to the market to shop,” Soydemir said.

With roughly 75 percent of the nation’s fruits and vegetables coming from the Central Valley, he said, the shift toward almonds and grapes from a more diverse landscape also affects grocery prices.

In other sectors, retail has rebounded and wholesale trade employment is rising steadily. Education and health services are outpacing other industries, especially in Stanislaus County, notes the semiannual report.

Manufacturing jobs dropped off in Stanislaus County but increased valleywide, in part thanks to the controversial high speed rail project underway in Fresno County, he said.

But the industry that boomed before the recession, single family construction, remains a shadow of its former self, with only 31 permits issued in Modesto and 50 in Merced for the first three quarters of 2015. Housing starts in Fresno led the valley with 1,414 issued. Construction outside of single family homes has fared better, but is just now reaching pre-boom levels of 2001.

The study reports an active rental market is causing rents to rise along with housing prices, especially in Stanislaus County. Foreclosure starts have dropped to the lowest level since 2005.

“Overall, the valley economy adapted exceptionally well to the four-year drought and displayed above-average performance,” the report concludes. “The projections point to the prevalence of similar upbeat economic dynamics in the two-year forecasting interval ahead.”

This story was originally published November 5, 2015 at 3:54 PM with the headline "San Joaquin Valley business forecast looking up, says Turlock professor."