Boom goes bust

Yuba-Sutter has recently been among California's booming areas thanks to commuters driven out of Sacramento's increasingly costly home market.

But higher gas prices and a housing slump will put an end to that growth spurt, says a researcher for the Center for Economic Development, at California State University, Chico.

"A lot of what's been going on in Yuba-Sutter is taking advantage of people who are commuting to Sacramento to work, and that's really not going to be an opportunity for the next five years or so," said David Gallo.

Commuters who work in Sacramento but call Yuba-Sutter home because of the relatively low-priced housing have caused Yuba-Sutter's population to jump, reversing a trend of people moving out of the area. The local economy has grown along with the housing, particularly in the construction, finance and retail sectors.

Now it appears that lower home prices in Sacramento and rising gas prices will reduce the demand for housing here.

Gallo was one of the speakers at Friday's Economic Forecast and Business Insights, put on by the Yuba-Sutter Economic Development Corp.

The seventh-annual forecast drew more than 200 people to the Church of Glad Tidings Auditorium, where the half-day event was held.

Though the area's growth may slow, Gallo said it could be an opportunity to expand existing industries and possibly even attract some new ones.

"You can't depend on the influx of Sacramento commuters for generating the economic growth," Gallo said in an interview. "So you need to examine what resources you have here and find new ways to generate economic development."

Gallo's take on the local economy followed summaries on national and Sacramento economic trends.

Gary Schlossberg, chief economist for Wells Fargo Bank, said the U.S. economy is in the midst of a slowdown that could fall into a mild recession with business levels picking up later in 2008 or 2009.

"Certainly the economy is sagging," said Schlossberg. "Some are raising yellow flags, some are raising red flags."

Ryan Sharp, director of the Sacramento Regional Research Institute, forecast slower growth for the next 12 months. Jobs will still be added but at a lower rate of 1.4 percent.

Contact Appeal-Democrat reporter John Dickey at 749-4711 or jdickey@appealdemocrat.com.