STOCKTON – The state economy will continue its sluggish recovery in 2013, but is expected to gain momentum the following two years, according to the University of the Pacific’s Business Forecasting Center.
Real gross state product is expected to grow 2.2 percent in 2013, a similar pace to the previous three years, according to the center’s quarterly report released in mid-February. That growth will improve to 3 percent in 2014 and near 4 percent in 2015.
Other economic forecasts also have predicted a growth rate of 2 percent to 2.5 percent for 2013, with gradual improvement in subsequent years.
“California’s recovery is tracking the U.S.,” said Jeff Michael, director of the Business Forecasting Center. “There is no evidence that the California economy is significantly outperforming the U.S. economy.”
California job growth will remain steady at about 2 percent over the next few years, somewhat faster than the United States. That is an expected outcome given the depth of California’s recession.
And while the overall state is tracking the national economy, the San Francisco Bay Area is surpassing it. Employment has already recovered to prerecession levels in the San Jose and San Francisco metro areas, according to the report.
“The Bay Area will continue to lead the recovery in 2013 with both the San Francisco and Oakland Metropolitan Statistical Areas posting job growth more than 3 percent, and the San Jose MSA just below 3 percent,” reads a portion of the report summary. “In 2014, Bay Area growth will slow to below 2 percent as the regional economy fully recovers and high housing costs and other constraints to growth become more binding.”
The fastest job growth will move inland to the Sacramento and Stockton MSAs beginning in 2014.
“The forecast projects over 2 percent job growth primarily driven by construction, the improving real estate market, and gradual recoveries in state and local government,” reads the summary of the report.
The Modesto Metropolitan Statistical Area – essentially all of Stanislaus County – is expected to spike by 4 percent in 2013, according to the report, up drastically from 0.2 percent in 2012. Growth is expected to average 1.5 percent for some time after 2013.
“The construction and mining sector is predicted to lead in job growth with an expected increase of 8.5 percent followed by the professional and business services and leisure and hospitality sectors with growth rates of 8.1 percent and 6.1 percent for 2013,” reads a portion of the report on Stanislaus County. “Moderate growth is expected in all sectors with the exception of the information sector and the federal government.”
The report expects a “healthy rate of 3 percent” growth in real personal income for 2013, with a decreasing annual rate for the foreseeable future.
Unemployment in Stanislaus County is expected to fall from about 15.5 percent in 2012 to 14.4 percent in 2013, with unemployment continuing to fall until it reaches 10.2 percent in 2017.
For Stockton and San Joaquin County, the employment rate had a 3.5 percent spike in 2013, which will be followed by a slim rate of 0.3 percent in 2013.
“Employment is expected to decline 0.6 percent and 0.8 percent in the first two quarters of the year, but will pick back up again with a 0.7 percent and 2 percent increase in the third and fourth quarters,” reads a portion of the report on San Joaquin County.
“The construction and mining sector will lead in job growth with an 11.3 percent increase in 2013. The remaining sectors are split between job growth and job loss. The sector that will suffer the most in terms of job loss is the Information sector with 7.2 percent decrease in employment.”
Real personal income will not increase as much as it did in 2012 – 2.1 percent – in 2013 because of the slight increase in employment. Instead, real personal income is expected to rise 1.7 percent in 2013. However, real person income is expected to spike again in 2014 at 2.9 percent and will continue to grow on average by 2.4 percent for the next three years.
Unemployment in San Joaquin County is expected to decrease from 15.1 percent in 2012 to 14.1 percent in 2013, with unemployment falling to 10 percent by 2017. The Business Forecasting Center at the University of the Pacific was founded in 2004. Housed in the Eberhardt School of Business, the center produces quarterly economic forecasts of California and 10 metropolitan areas in Northern and Central California.
In addition to the quarterly forecasts, the center produces in depth studies of regional issues, and offers custom economic research services to public and private sector clients. Visit http://forecast.pacific.edu/ for more information.