Region's Economic Outlook
From January 2006
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Transitory Impacts
“But unlike the oil shocks of the ’70s, this time around the impacts are going to be more transitory in nature,” says Sean Snaith, director of the Business Forecasting Center and professor of economics at the Eberhardt School of Business at the University of the Paci?c in Stockton. “We’re going to start to see the effects dissipate after the fourth quarter of 2005.”
The center’s national forecast for the ? rst half of 2006 is that prices will continue to fall back in a “surge” of real output that will be fueled in part by expenditures for reconstruction of states in the Gulf damaged by last year’s hurricanes. That will lead to a stronger ?rst half this year, with GDP returning to a trend rate of growth in the low 3 percent range by year’s end.
“The Sacramento metro area is going to follow suit and mirror what we see at the national level,” says Snaith, “so we anticipate a fairly strong 2006 for our region and the state.” His forecast includes total payroll employment growth of about 2.4 percent in the region, with the healthiest sectors being education, health services and professional and business services.
Suzanne O’Keefe, assistant profes-sor of economics at California State University, Sacramento, replies, “Not particularly,” when asked if she has any concerns about the region’s 2006 outlook.
She’s “cautious” about the housing market, but overall sees no economic areas showing signs of “extreme” decline. “I expect employment in the regional economy to be strong,” O’Keefe says. “Employment growth in the Sacramento region is picking up, growing around 2 percent over the last few months of 2005.
“It was slower for the past two years, when employment growth in the area ranged between 0.5 percent and 1.5 percent, so it’s picked up a little, primarily because the public sector (government) is growing again in Sacramento,” she notes. Housing, however, is “a different story” as the residential market is beginning to slow, something O’Keefe says could continue in 2006.
“High energy prices could potentially lead to in? ation,” she says, “but at this stage, the Fed has kept in? ation under control and I expect it will continue to do so under new Fed Chairman Ben Bernanke.”
Barbara Hayes, executive director of the Sacramento Area Commerce and Trade Organization, is “optimistic on several fronts,” among them contin-ued population growth in the region and the jobs that will be created. She’s “incredibly optimistic” about large projects planned or underway, including new high rises in down-town Sacramento for offices, condos and lofts.
Continued...
“But unlike the oil shocks of the ’70s, this time around the impacts are going to be more transitory in nature,” says Sean Snaith, director of the Business Forecasting Center and professor of economics at the Eberhardt School of Business at the University of the Paci?c in Stockton. “We’re going to start to see the effects dissipate after the fourth quarter of 2005.”
The center’s national forecast for the ? rst half of 2006 is that prices will continue to fall back in a “surge” of real output that will be fueled in part by expenditures for reconstruction of states in the Gulf damaged by last year’s hurricanes. That will lead to a stronger ?rst half this year, with GDP returning to a trend rate of growth in the low 3 percent range by year’s end.
“The Sacramento metro area is going to follow suit and mirror what we see at the national level,” says Snaith, “so we anticipate a fairly strong 2006 for our region and the state.” His forecast includes total payroll employment growth of about 2.4 percent in the region, with the healthiest sectors being education, health services and professional and business services.
Suzanne O’Keefe, assistant profes-sor of economics at California State University, Sacramento, replies, “Not particularly,” when asked if she has any concerns about the region’s 2006 outlook.
She’s “cautious” about the housing market, but overall sees no economic areas showing signs of “extreme” decline. “I expect employment in the regional economy to be strong,” O’Keefe says. “Employment growth in the Sacramento region is picking up, growing around 2 percent over the last few months of 2005.
“It was slower for the past two years, when employment growth in the area ranged between 0.5 percent and 1.5 percent, so it’s picked up a little, primarily because the public sector (government) is growing again in Sacramento,” she notes. Housing, however, is “a different story” as the residential market is beginning to slow, something O’Keefe says could continue in 2006.
“High energy prices could potentially lead to in? ation,” she says, “but at this stage, the Fed has kept in? ation under control and I expect it will continue to do so under new Fed Chairman Ben Bernanke.”
Barbara Hayes, executive director of the Sacramento Area Commerce and Trade Organization, is “optimistic on several fronts,” among them contin-ued population growth in the region and the jobs that will be created. She’s “incredibly optimistic” about large projects planned or underway, including new high rises in down-town Sacramento for offices, condos and lofts.
Continued...
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