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Valley lagging in economic recovery

POSTED April 19, 2011 10:07 p.m.

The California economy is improving, but the recovery isn’t reaching the extent of the Central Valley, according to the Business Forecasting Center at the University of the Pacific.

Tech-focused economies, like San Jose, are “experiencing robust growth,” but those dependent on housing and government jobs are still exhibiting signs of recession.

“The gap between Sacramento and other areas that appeared in 2010 is deepening in 2011,” said Jeff Michael, director of the Forecasting Center.

In the short-term, the center forecasts a slight overall recovery, statewide.

But statewide unemployment will remain at or above 10 percent through the close of 2013, the center forecasts. The center believes that statewide unemployment has hit its peak – 12.5 percent in the fourth quarter of 2010 – but jobs will not return to their 2007, pre-recession peak until midway through 2015.

With eight years of zero net job growth, the state’s population will have grown by 3 million, keeping unemployment above 8 percent.

The Modesto Metropolitan Area, which includes Turlock, is projected to fare better than Oakland, Vallejo, and the rest of the Valley in 2011, with employment rising 1.9 percent. By 2014, Stanislaus County’s unemployment rate will have fallen from a 17.6 percent high in 2010 to 13.5 percent, the Center projects. That’s tied with San Joaquin County, and better only than Fresno County – 13.8 percent – and Merced County – 16.1 percent.

Recoveries in agriculture, transportation and trade and manufacturing – in 2010, California experienced the first annual increase in manufacturing jobs in a decade – have aided the Central Valley, the center said. The health sector was another bright spot, consistently adding jobs throughout the recession; nearly 104,000 jobs were created between 2008 and 2010, and a further 128,000 jobs are expected by 2014.

Private sector jobs are recovering throughout the state, save for housing-related jobs in construction and finance. By 2013, however, the center forecasts construction as the leading source of job growth, with 100,000 new housing starts – about 50 percent of the pre-recession peak. About 229,000 new construction jobs will be created over the next four years, amounting to 17 percent of the state’s total non-farm growth.

But much of the valley’s recovery could be slowed, should the state legislature reach an impasse on the budget. The center forecasts a 2.5 percent decline in state and local government employment – including public schools – in 2011, and a further 1 percent decline in 2012.

“The fragile recovery in the San Joaquin Valley could be hobbled by deep cuts in government spending,” Michael said.

To contact Alex Cantatore, e-mail acantatore@turlockjournal.com or call 634-9141 ext. 2005.

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