Recession recovery? Mid-Valley by the Numbers

By such measures as unemployment, foreclosure rates and median home prices, few states have been as dramatically affected by the worst recession in modern times than California. And few parts of the state have taken as hard a blow in the downturn as the Mid-Valley region.

Economists and local economic experts said there's no mystery about what happened, and there's also no mystery about what will bring the economy back: Good, old-fashioned jobs.

"We're seeing people really interested in the area," said Steve Carrigan, vice president of economic development for the Yuba-Sutter Economic Development Corporation. "The signs are starting to show positive."

"Are we coming back? I think yes. But slowly."

As the economy recovers, though, Carrigan and others said it's likely to do so in a different manner than the last economic boom of a half-decade ago, which launched an explosion in real estate prices.

Hundreds of homeowners locally and elsewhere took advantage of new loan options, allowing them buy houses beyond their means. Others took equity in their homes and turned it liquid, enabling them to boost their consumer spending.

When prices fell and the loans began to sour, housing plummeted, leading to losses of jobs in construction, retail and other sectors. California is in the top five states nationally for unemployment rate and was second highest at the start of 2009 in foreclosure rates, according to RealtyTrac.com.

And in this area as in Stockton, Modesto and other recently infamous housing bubbles, the burst was dramatic.

"It's an old story, but it's still the main story," said Jeffrey Michael, director of the Business Forecasting Center at University of the Pacific in Stockton. The center studies economic trends in the Central Valley and California.

"What we saw last fall was the recession spread across all sectors of the community. No area is unscathed," he said.

In Yuba-Sutter, the examples of the recession's effects can be seen in everything from the closure of longtime retailers Mervyns and Gottschalks to an unemployment rate of nearly 20 percent, among the highest of any metropolitan area nationally.

Housing's decline is so stark, Carrigan said, he doesn't expect starts to rebound significantly until 2014 or later.

But he's bullish on the regional economy in other ways. With the relatively low cost of living, lots of land and other incentives, the region could have a leg up in attracting manufacturing jobs in the next few years, he said.

Particularly, Yuba-Sutter may have an advantage in tapping into the hot "green jobs" sector, partly because of its proximity to Sacramento, Carrigan said.

Being close gives legislators and state officials the ability to make an easy trip north to see such jobs in person, he said.

As proof, he said one of the companies mulling a move to the area is a solar cell company based in the Silicon Valley. "We're pushing a site that fits all his needs, and he's closer to Sacramento," Carrigan said.

Yuba City's economic development manager said housing and jobs will both be part of an economic recovery.

The city, in its specific plan update, is setting aside land for future industrial use, a condition Carrigan said is important for attracting new jobs.

But Manager Darin Gale said Yuba City has also been lucky to see relatively few retail losses.

"We're definitely seeing interest of people who are coming into empty store fronts, which we don't have many of," he said.

Michael, of the business forecasting center, said housing won't be gone entirely, but its recovery will depend on factors outside the counties' borders.

If the economy in Sacramento improves, he said, it would spur more people to buy homes in the greater area. That could boost dormant housing projects in south Yuba and Sutter counties.

"The housing train has not left the station for good," Michael said.

And the region has one steady economic base that will help it weather the downturn, Michael said: The crops and orchards that didn't give way for housing.

"I suspect you've got a certain agricultural base that's more stable relative to the construction industry and commuter industry," he said.

By the Numbers Graphic (PDF)

UNEMPLOYMENT

Job losses both locally and in Sacramento, where many residents commute for work, boosted the unemployment rate as the economy worsened in 2008. Particularly hard hit were construction and retail sectors, and some public-sector jobs were eliminated as governments dealt with budget deficits.

MEDIAN HOME PRICE

As elsewhere, home prices began to fall to earth in 2007, then declined even further in 2008 and early 2009, as more homes lost to foreclosures came onto the market at reduced prices. Experts are unsure whether prices will continue to fall into 2010 or begin to stabilize, but relatively little home construction is happening now.

FORECLOSURES

Mirroring the drop in home prices was the rise in foreclosures, as many homeowners couldn't deal with adjustable interest rates and underwater loans, and began giving homes back to the bank in 2007 and 2008. Foreclosure moratoriums have slowed the numbers somewhat this year, but experts believe banks are also increasingly holding off foreclosure to avoid having homes on their financial books.

BANKRUPTCIES

Changes in bankruptcy laws in 2006 slowed the rate to a trickle for months afterward, but that number began rising again as people extended too far in credit — much of it tied up in their home loans and equity lines — began throwing their hands up in the face of soaring bills.

SALES TAX REVENUES

The closure of longtime retailers such as Mervyns and Gottschalks as well as downturns felt by auto dealers and furniture stores accelerated a drop in sales tax revenues in 2007 and 2008. Local governments, which rely on sales tax revenue for much of their budgeting, began cutting in response. Economic experts believe the holiday season may be critical for some stores' long-term survival.

PEOPLE ON FINANCIAL ASSISTANCE

County Health and Human Services departments saw more people on their food stamps programs as the economy worsened, many of them doing so because they'd lost their jobs, homes or both. County officials have said state cuts to such programs haven't helped.

AGRICULTURAL SALES

A bright spot amid a lot of darkness, farmers competing on a world market saw record sales in recent years. Rice, peaches and tomatoes are among the most lucrative crops in the three-county region. Absent a weather or pest disaster, many experts believe agriculture will hold up through the economic downturn.

AUTO SALES

The crimp in people's home equity and disposable income, brought on by the housing meltdown and the resulting recession, were felt strongly by auto dealers, whose fortunes often follow housing. With U.S. automakers reeling in late 2008, local dealers felt the pinch, as price-savvy consumers either passed on expensive trucks and SUVs or looked for foreign models. Government programs such as Cash for Clunkers provided a boost this year, but it's unclear whether they've fully reversed the dealers' woes.

Contact Appeal-Democrat reporter Ben van der Meer at 749-4709 or bvandermeer@appealdemocrat.com.