STOCKTON — Both the state of California and San Joaquin County, in particular, can expect solid growth in 2016, according to the latest projection from the Center for Business and Policy Research at the University of the Pacific.
The center expects the state to see a 3.5 percent increase in real gross state product over the next 12 months, despite seeing job growth slow to 2 percent in 2016. The projection also believes that Stockton will see a 3.9 percent increase in non-farm employment and that the unemployment rate will hover at 8.1 percent in 2016.
The projection also forecasts that while job growth will slow to 1.4 percent by 2019, the city’s unemployment rate will also drop to 7.3 that year.
The forecast predicts more modest, but stable growth in Modesto. The city will see similar growth patterns to Stockton with 2.7 percent non-farm job growth and 8.7 percent unemployment in 2016. The city will see job growth slow and unemployment shrink moving into the future with growth hitting 1.5 percent in 2019 and unemployment dropping to 8.3 percent.
Merced’s chronically high unemployment rate will shrink, but not by much, according to the forecast. The city will see non-farm job growth of 0.9 percent in 2016 grow to 1.9 percent by 2019. It will also see a projected unemployment rate of 10.5 percent in 2016 fall to 9.3 percent by 2019.
The report credits most of San Joaquin’s growth to a spill-over effect from the Bay Area’s rapid expansion. San Joaquin and Alameda counties led the state in population growth in 2014 and 2015. As a result the center expects the Oakland and Stockton metropolitan areas to take the lead in Northern California job growth in 2016. San Francisco and San Jose had posted the fastest growth in the last two years.
“While we expect a slow-down from incredible growth rates of recent years in Silicon Valley, its dynamic economy is the driving force behind much of the inland growth as high costs and scarce labor cause its economic growth to spill into neighboring areas,” stated the report.
The center expects the statewide unemployment rate to stabilize around 5 percent. Forecasters also expect that the state’s high cost of living and housing shortage will present a drag on state’s overall growth.
A 50 percent increase in housing starts over the next three years will provide a significant economic boost to inland areas, but will barely cover the state’s expected 1 percent pollution growth, according to the projections.
The report also found the severe drought has had a relatively small statewide economic impact. It estimates the drought cost the state $3-4 billion, less than 0.2 percent of state GDP in 2015. The group also expects virtually no statewide economic boost if the drought abates.
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