Merced County Times Newspaper
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Forecast: Steady 2019 growth for state, regional economies



The California economy should maintain strong growth through 2019 despite an uncertain political environment and financial market volatility, according to the latest projection from the Center for Business and Policy Research at the University of the Pacific.

California’s record low unemployment rate is projected to stabilize at 4 percent for through 2020 before gradually increasing. California’s rate of economic growth is forecast to grow at a 2.9 percent rate for the next 12 months, and fall below 2 percent by 2021 as recession risks grow.

The regional outlook projects Sacramento to lead Northern California in job growth in 2019 after lagging slightly behind the rapid growth seen in the Bay Area, Stockton, and Merced in recent years.  Sacramento’s government and healthcare based economy should sustain, if not accelerate, growth in 2019 as most other Central Valley areas gradually slow with the broader California economy. They also project San Francisco and San Jose to sustain over 2 percent job growth in 2019 despite the region’s housing constraints and unemployment averaging below 2.5 percent. This is partially due to increased commuting from inland areas, but also because skilled-workers are displacing others from the Bay Area’s housing stock which allows the region’s skilled workforce to grow significantly faster than population growth.

The forecast also discusses Governor Newsom’s agenda including his recent announcement to downsize the costly and controversial megaprojects championed by Governor Brown: California high-speed rail and the Delta water conveyance tunnels. The full forecast can be downloaded from the Center’s website at:


Other Highlights

• Nonfarm payroll jobs will grow 1.4 percent over the next 12 months, after slipping below 2 percent growth in 2018 for the first time since 2011. Payroll growth will drop below 1 percent by late 2020, a good pace for an economy near full employment.

• Health Services has become the largest employment sector in the state after a period of rapid growth. Health services is projected to add more than 20,000 positions over the next 12 months, a slowdown from the 85,000 health services jobs added in 2017.

• Professional Scientific & Technical Services is a high-paying sector that has fueled the recovery, and is forecast to be a growth leader in 2019 adding over 80,000 jobs.

• Growing consumer spending at restaurants has fueled rapid growth in the Leisure and Hospitality sector. This sector has added up to 75,000 jobs in recent years, but the study projects only about 10-15,000 new jobs in each of the next few years as rising labor costs and low labor availability drives change in the hospitality sector.

• State and local government employment experienced solid 2 percent employment growth from 2014 to 2017 as public budgets, especially in education, recovered. However, state and local government hiring will drop below 1 percent for the next several years in spite of revenue growth as these entities grapple with slower revenue growth and rising pension costs.

• Construction jobs have been growing rapidly in recent years as the hard hit sector continues to recover. Study researchers expect a slight slowdown in construction job growth in 2019, about 30,000 new jobs compared to as much as 50,000 in recent years. Job growth is limited by worker availability and little expansion to residential construction in 2019.

• Single family housing starts are projected at 66,000 in 2019, about the same as 2018. Multi-family production is also projected to be flat in 2019 between 45,000 and 50,000 new units. After 2019, total new housing starts are expected to gradually grow another 10 percent and stabilize at just over 125,000 total new single and multi-family units per year.

• California’s population growth is projected at about 0.5 percent for the next several years, at or near a record low growth rate. California’s population is still on track to reach 40 million this year prior to the 2020 census, and should add about 200,000 new residents per year.

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