The economic forecast for the San Joaquin Valley looks sunny, according to a report from California State University Stanislaus.
Gokce Soydemir, the Foster Farms endowed professor of business economics at CSU Stanislaus, points to an increase in home values, single-family building permits, rising employment and fewer foreclosures as key indicators of the continued economic improvement.
In his third annual Business Forecast Report, Soydemir says that rising consumer confidence and wealth have helped increase purchases of goods and services for individual or household use, leading to greater national demand for wholesale, manufacturing and farm-related goods from the Valley.
Soydemir and his team use a unique forecasting model that produces lower and upper statistical confidence bands; actual results are expected to fall within this range. Soydemir looks for data that signals “turning points” and offers clues to future performance. To date, the reports have proven to be about 94 percent accurate, providing a highly reliable forecasting tool for business owners and decision makers.
The report indicates that in 2011-12 the Valley economy began catching up to its long-term mean, showing slowly strengthening performance. Following a well-defined housing market turning point in the past year, builders slowly began constructing new dwellings.
The unemployment rate is now below 8 percent nationally, and the U.S. real GDP is projected to grow more significantly in 2014 than 2013. As projected in earlier reports, the natural rate of unemployment of 12 percent for the Valley and 6 percent for the nation is projected to be reached by early 2014. In October the Stanislaus County unemployment rate was 11.7 percent.
Highlights of the report include:
• The housing sector showed significant growth in 2013. Single-family building permits increased 37 percent, and home values increased more than 20 percent.
For the first time since the recession ended, employment grew in all eight counties in the Valley, with Merced and San Joaquin counties growing the most in 2013. The wholesale trade and construction sectors had the fastest employment growth.
• Valley total employment grew 2.5 percent in 2013 – more than double the 10-year benchmark rate. The Valley economy is projected to continue at this accelerated pace in 2014 and 2015.
• With inflation rates remaining lower than anticipated, weekly wages are likely to grow at a slower pace. Valley weekly wages are projected to increase at a rate of 2.25 percent from 2014 to 2015.
The Business Forecast Report, which is available free at http://www.csustan.edu/sjvbfr, provides projections for the San Joaquin Valley labor market, regional housing conditions, prices and inflation, and depositary institutions and capital markets.