The San Joaquin Valley is showing gradual signs of economic recovery and should continue slow growth in the next two years, according to a report by Dr. Gökçe Soydemir, endowed professor of business economics at California State University, Stanislaus.
Dr. Soydemir recently released a midyear update of his inaugural Business Forecast Report, first published in November 2011. The midyear update is to assess the accuracy of the initial report to provide updated forecasts to 2014. Per Dr. Soydemir, the initial forecasts were off by less than 3 percent, well within the target accuracy margin of 5 percent.
Most noteworthy: In 2011, total employment grew at an annual rate of 0.82 percent – a very small increase, but significant because it is the first growth in employment since the recession began.
Dr. Soydemir joined CSU Stanislaus as Foster Farms Endowed Professor of Business Economics in August 2011. He brings strong expertise and experience in business analysis and forecasting and has published extensively on applied econometrics, regional economics, financial forecasting, market analysis and international finance.
According to Dr. Soydemir, as the nationwide economic recovery began earlier this year, the San Joaquin Valley “continued to lag behind.” While cities such as Modesto and Turlock saw sales tax receipts on the rise and property tax collections displaying a stabilizing pattern, other cities such as Stockton saw economic conditions worsen due to the ongoing effects of the housing-related crisis.
Dr. Soydemir also reported that the yearly inflation rate fell from 3.2 percent in September 2011 to 2.6 percent by January 2012, and average sales prices of new single-family houses declined at a much lower pace in the fourth quarter of 2011, displaying early signs of stabilization.
“With job creation and housing market correction, the current sentiment of the public in general has now been marginally more upbeat,” stated Dr. Soydemir in the report. “However, most jobs are not full time or full pay, contributing to frustration with the job market despite increases in job numbers generally above 120,000 per month nationwide.”
Turlock City Manager Roy Wasden also shared similar information regarding the increase of sales tax in Turlock, as well as property tax. Wasden stated that the two largest sources of General Fund Revenue are from sales tax and property tax, and that the two are tracked very closely.
“We track these closely and even meet with our top 25 sales tax producers annually to review their current and projected business trends,” stated Wasden. “In our last round of visits we found that except for two businesses, all were meeting and exceeding their current expectations and anticipated that trend to continue.”
Wasden also added that the two businesses that were not exceeding expectations were at or near their projected activity levels.
“We have seen solid increases in sales tax revenue consistent with the reports we received,” stated Wasden. “We anticipate this will continue and have budgeted a 6% increase in sales tax revenue in the 2012/13 fiscal year.”
While sales tax increases have been and continue to be on the rise in Turlock, Wasden reported that Stanislaus County has noticed Turlock, that they are projecting over 4% reduction in property tax value. This will be about a $300,000 reduction in property tax revenue.
“We do believe that property tax is at the bottom based on the lack of inventory and reported prices of property sales that are being made,” explained Wasden.
Regardless of the slight decrease in property tax value, however, Wasden believes that the City of Turlock is indeed witnessing a boost in the local economy.
“What we are seeing is a gradual increase in the local economy that we believe will continue and will be helped with economic growth in our community,” he stated. “Of particular importance is economic growth that leads to new jobs like the Blue Diamond investment and the fact that 10 new businesses have started up and have participated in the Turlock Business Partnership Incentive Program and represent 55 new jobs.”
“[These] investments like Olive Garden, Ulta Cosmetics, Old Navy, and the New Chrysler Jeep Dodge Ram dealership are all good for our economic growth and for the Turlock Community.”
Dr. Soydemir expressed the same sentiment that, although it may be slow, the regions economy is gaining momentum.
“In all, the region’s forecasts in the interval June 2012 to June 2014 point to an economy that is slowly gaining strength,” stated Dr. Soydemir in his report. “As the speed of the recovery picks up nationwide, the Valley economy is projected to benefit from this expansion more so during the latter half of 2012 and extending into the first half of 2013.”