County’s economic outlook not great, but not horrible

Steady job growth, but ‘not enough yet’
Sonoma County’s economy is moving forward once again, but at a
pace closer to a snail’s than a rabbit’s. But for a housing and
jobs market that was stuck in reverse for the past three years that
qualifies as good news, according to economist Chris Thornberg as
he told 400 top business and banking leaders last week in an annual
economic forecast address in Santa Rosa.
“As far as recoveries go – this is a lousy one,” Thornberg said,
while also declaring “but things ain’t that bad.”
Following the Great Recession of 2008 which hit Sonoma County
even earlier than that, Thornberg showed a pile of statistics
showing the local economy has improved over each of the last nine
quarters, with retail sales up and investments in tech and
healthcare businesses improving along with local tourism
activity.
Even with a stubborn unemployment problem (almost 10 percent)
the economist said there has been steady job growth in the county,
“but not enough yet.” Construction and government jobs are still
way down, he pointed out.
After warning the same audience of a pending housing and asset
collapse in a similar speech here four years ago, Thornberg did his
best to remain positive last week.
“I can guarantee when I come back to this room next year, there
will be many, many happier folks in the room.”
He discounted any talk or predictions of a “double dip” or
return of the Recession, regardless of ongoing European troubles or
federal deficit scares.
“No data, anywhere, supports these theories. It’s all fluff and
worry,” the animated and entertaining economist told the
audience.
Thornberg’s appearance was sponsored by the county’s Economic
Development Board. He has delivered an annual economic forecast to
the county since 2008. At this year’s breakfast, county supervisors
Efren Carrillo and Mike McGuire also provided a brief update on a
series of new county government strategies and actions being
designed to encourage job creation throughout Sonoma County.
“I applaud your local efforts,” Thornberg told the supervisors.
“Everything points to a local economy that is turning the corner.
There are some very solid numbers in consumer spending and retail
sales. Commercial vacancies are leveling off, too.”
One factor that will continue to keep the county’s economic
growth at a slower than desired pace will be continued cuts in
local government spending and jobs, Thornberg said.
He said the local housing market is a “yin and yang” picture.
“Affordability and record low interest rates” are positive signs
while homeowners’ equity remains low and well below property values
that existed before the housing bubble collapse of 2008.
“That was a huge shock that hit everyone. When you look for a
recovery, you have to think in terms of decades – not just a year
or two.”
Thornberg also was dismissive of this year’s wild ups and downs
of the Stock Market. “Forget about it,” he advised the audience.
“The Stock Market is the ultimate drama queen. It over-reacts to
everything.”
Looking across the more immediate horizon, Thornberg said local
and federal governments should increase infrastructure and public
education investments. He said tax cuts are a bad idea that only
supports modest increases in consumer spending that ultimately
increases imports from China, Japan and elsewhere. “Think about it.
When a taxpayer gets a $1,000 tax cut what does he do? He buys a TV
or something else made in China. How does that help our
economy?” he asked.
Instead of tax cuts for individuals, government should add new
tax credits for businesses that create jobs or expanded domestic
commerce, he advocated.
He said the federal deficit needs to be addressed but not all at
once. “You can’t go ‘cold turkey.’ We have to work our way out this
slowly or else the economy won’t grow.”
Supervisors Carrillo and McGuire shared the main points of a new
job creation program that includes public-private collaboration,
streamlined permitting procedures and relaxed regulations.
A program to strengthen Sonoma County’s “brand” was highlighted
to increase consumer awareness about the many products grown and
produced here.
A formal launch and update will be given next June, Supervisor
McGuire told the audience.
In January, the Economic Development Board will sponsor an
annual “state of the county” luncheon, similar to last week’s
report by Thornberg.