STOCKTON — The University of the Pacific’s Center for Business and Policy Research predicts steady growth for the California economy, despite a slowdown at the beginning of the year. It also expects Stockton to be a leading force in Northern California job creation.
Consumer spending and residential investment are two of the main drivers for continued growth. While both have increased less than expected, they remain positioned to propel future growth.
Job growth rebounded in April and the center expects about 25,000 net new jobs each month to be produced during the next year. The forecast says the unemployment rate will remain near its current level of 5.3 percent during the next few years.
Stockton is in the process of posting its fourth consecutive year of job growth above 3 percent and is projected to lead Northern California job growth in 2016 and 2017. The growth has largely been led by a booming logistics sector attracted to the city’s strategic location near the Bay Area. Stockton’s unemployment rate is expected to hover between 7.3 and 7.6 percent through 2019.
Modesto’s unemployment rate is expected to drop to 8.3 percent in 2016 from 9.3 percent in 2015. The center predicts Modesto’s rate will drop to 8.2 in 2017 before climbing to 8.3 in 2018 and 8.7 in 2019.
Merced is expected to have an unemployment rate of 10.3 percent in 2016. It is expected to drop to 9.7 percent in 2017 and then 9.2 percent in 2018 and 2019.
Fresno has seen its unemployment rate drop to single-digits for only the fourth time in the past 25 years. Construction activity on high speed rail and improved drought conditions in the Fresno area are predicted to keep the expansion going in 2016 and 2017.
The center predicts that the Bay Area will see its growth slow gradually due to shortages of real estate and labor which will drive up costs.
Other highlights concerning the state’s economy from the report include:
- Nonfarm payroll jobs have grown at a strong 3 percent pace for the past three years, but a more moderate 2.3 percent growth is expected in 2016, 1.7 percent growth in 2017, and approximately 1 percent growth from 2018 through the end of the forecast in 2020.
- Growing tourism and a gradual shift in consumer spending from retail to restaurants has led the leisure and hospitality sector to exceed 4 percent job growth in each of the past 4 years, and is projected to add more than 35,000 additional jobs over the next year.
- Nearly 40,000 new Construction jobs are anticipated in each of the next three years, just below a 5 percent annual growth rate.
- Single-family housing starts are beginning to increase, but fell short of 50,000 units in 2015 and are on track for a modest gain to 57,000 units in 2016. The center projects a substantial increase to 79,000 units in 2017, and 90,000 units in 2018.
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