Central Valley Business Journal, May 1, 2012
By KEITH MICHAUD/Business Journal Editor
STOCKTON – Economic recovery in California will remain at a slow pace for the next few years, but there are some glimmers of hope.
“The Stockton area was one of the hardest hit areas in the nation, but leads the state in job growth over the past 12 months,” Jeff Michael, director of the Business Forecasting Center at the University of the Pacific in Stockton, said Tuesday (May 1) with the release of “California and Metro Forecast: April 2012.” “The drag from housing has bottomed out, and other mainstay industries such agriculture and transportation are performing well.”
Real gross state product will grow at an average of 2.5 percent for 2012 and 2013, according to the report, and jobs will increase at 1.5 percent. The pace of the recovery gradually will increase as housing and construction pick up.
The Business Forecasting Center, part of Pacific’s Eberhardt School of Business, produces quarterly economic forecasts of California and 10 metropolitan areas in Northern and Central California, including Stockton and Modesto.
The report noted that the state’s current unemployment is about 11 percent and that it was expected to remain in double digits through the last quarter of 2013.
“The regional outlook predicts that 2012 is the first year of economic recovery in the hard hit Central Valley,” reads the statement released with the report. “Further government spending cuts remain a risk for the Valley recovery, especially in the Sacramento and Fresno areas.
“The Bay Area continues to lead the state’s recovery, and the strong recovery in the Silicon Valley has now spread out across the entire Bay and across sectors to include more than just technology. All parts of the Bay Area are projected to exceed 2 percent job growth in 2012.”
Here are some of the highlights of the April 2012 California Forecast:
- The recovery remains sluggish throughout California and the economy will grow at 2.5 percent in 2012 and 2013. That is a very slight improvement from the first two years of recovery when growth in real gross state product averaged less than 2 percent.
- Unemployment in the state has declined to 11 percent, but will decrease more slowly over the next year. It will remain at about 10 percent until the fall of 2013.
- While payroll jobs continue steady growth, the state will recover only about 25 percent of the jobs lost in the recession. Non-farm employment will recover its pre-recession peak in the first quarter of 2016.
- Real personal income is expected to exceed the peak of 2008 in the second quarter of 2012 because of stronger recovery in non-wage income an d higher wage industries such as technology.
- There will be nearly 300,000 construction jobs will be created over the next five years, which will be about 24 percent of the state’s total non-farm job growth. But even so – and despite leading the job growth in the state from now until 2016 – there will still be 100,000 fewer construction jobs in 2016 than before the recession.
- Manufacturing employment will strengthen in 2012 and will increase by 32,000 jobs.
- Health services is the only private sector to experience consistent job growth throughout the recession, adding nearly 25,000 jobs per year throughout the recession. Health care employment will grow at a slightly faster rate in the coming years, adding over 30,000 jobs per year in 2012 and 2013.
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