Economic Outlook 2011: Non-profits at the nexus of changing private and public markets

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Angela Norris
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1 Economic Outlook 2011: Non-profits at the nexus of changing private and public markets Santa Rosa, CA June 8, 2011 Robert Eyler, Ph.D. Chair, Economics Department Frank Howard Allen Research Fellow Director, Center for Regional Economic Analysis Sonoma State University

2 In Recovery: Changes Coming Recovery continues at national level Labor markets continue to be the problem Non-profits likely to see rising demand and potentially supply California challenges and opportunities Budget issues at all level of government in CA Labor force has public and private sector challenges Sonoma County and North Bay Industries growing but remain vulnerable Public sector contractions starting Role of Non-profits: prepare for change 2

3 Domestic National Economy International economics and geopolitics an issue Continued slow movement at national level New industries have not shown their face as leaders Technology companies gearing up for major M&A activity Commercialized science the long-term play for the US Biggest challenge is job matching: can we avoid another jobless recovery? Recovery under way, but may be slowing down Must watch how price pressures change consumers Labor markets are generating a wait-and-see financial market 3

4 2007:1 2007:2 2007:3 2007:4 2008:1 2008:2 2008:3 2008:4 2009:1 2009:2 2009:3 2009:4 2010:1 2010:2 2010:3 2010:4 2011:1 Index (2007 Q1 = 100) 140 Comparison of GDP Components, US, 2005$, Present Consumption Investment Govt Spending Exports 20 - Quarter Source: 4

5 Jan-90 Aug-90 Mar-91 Oct-91 May-92 Dec-92 Jul-93 Feb-94 Sep-94 Apr-95 Nov-95 Jun-96 Jan-97 Aug-97 Mar-98 Oct-98 May-99 Dec-99 Jul-00 Feb-01 Sep-01 Apr-02 Nov-02 Jun-03 Jan-04 Aug-04 Mar-05 Oct-05 May-06 Dec-06 Jul-07 Feb-08 Sep-08 Apr-09 Nov-09 Jun-10 Jan High Tech Activity (Tech Pulse), Index, Jan 2001 = Source: 5

6 Billions of $ 18 Excess Reserves at U.S. Depository Institutions (Loanable Funds Not Lent), 2008$, Jan Aug Month Source: 6

7 Billions of $ 1600 Excess Reserves at U.S. Depository Institutions (Loanable Funds Not Lent) 2008$, Jan Present Source: 7

8 Jan-97 May-97 Sep-97 Jan-98 May-98 Sep-98 Jan-99 May-99 Sep-99 Jan-00 May-00 Sep-00 Jan-01 May-01 Sep-01 Jan-02 May-02 Sep-02 Jan-03 May-03 Sep-03 Jan-04 May-04 Sep-04 Jan-05 May-05 Sep-05 Jan-06 May-06 Sep-06 Jan-07 May-07 Sep-07 Jan-08 May-08 Sep-08 Jan-09 May-09 Sep-09 Jan-10 May-10 Sep-10 Jan-11 May-11 Billions of 2008$ 1600 Excess Reserves at U.S. Depository Institutions (Loanable Funds Not Lent) 2008$, Jan Present Month Source: 8

9 California A wild paradox: innovation and inaction Still the world leader in frontier technology Two major issues with California labor force Retiree bubble coming: private and public Government staffing for state, county and city workers likely to change: where will these folks find work Recovery is underway in California, but geographic Personal income gains, and wage/salary gains now part of that Bay Area doing well, North Bay a little less so, inland valleys still suffering 9

10 % Growth CA Personal Income Growth, 2003$, % 4.0% 3.0% 2.0% 1.0% 0.0% -1.0% -2.0% -3.0% Quarter Source: BEA (

11 % Growth CA Wage and Salary Growth, 2003$, % 4.0% 3.0% 2.0% 1.0% 0.0% -1.0% -2.0% -3.0% -4.0% -5.0% Quarter Source: BEA (

12 Emerging from recession Sonoma County Lagging national recovery, but recovering High tech emerging in North Bay Biotech, software, core tech: can we keep these firms? Where is green tech in this mix? Wine and tourism: cannot be outsourced Real estate in 2011 looks slightly better than 2010 Sonoma County still in demand, need job growth General recovery, as well as local recovery, still tied to this industry and its markets 12

13 Real Estate: Simple Thoughts Unemployment puts both supply and demand pressures on market Slow movement a function of buyer tentativeness, banking regs and lack of labor market recovery Who will demand real estate here through 2015? Commercial new construction likely to be projectspecific rather than anticipatory Vacancies starting to fall

14 Median Home Price Comparisons, 2002 = 100, 1990-Present Source: 14

15 Public Sector Opportunities Local cuts are coming to public workers More unemployed Larger need for transition services Increased time for public services provision Pensions and slow economic recovery the culpable parties Pensions a difficult problem to solve without cooperation Slow economic recovery exposes 15

16 Non-Profit Sector as Beneficiary Challenges similar to the public sector due to funding sources Can more private donations be found? What about more partnerships (public-private)? Need to recognize the size of the non-profit sector in Sonoma County Approximately 4,000 workers and 2% of economy Need to recognize demand expansion to come Slow recovery means more socioeconomic pain 16

17 Connections As public sector contracts, non-profits may be asked to do more Directly or indirectly: find direct ways More volunteers and workers Retirements provide pensioned volunteers New workers trained in working with public sector coming out into work force Non-profit sector (through WIB) will be asked to provide retraining and retooling also Think regionally: need to consider efficiencies 17

18 Recovery through ? Labor market recovery slow Fuels consumer confidence and business forecasts State economy will lag national Recovery has started, needs to seize opportunities Expect some labor market shifts for state and local gov t Commercializing science long-term recovery key Targeted industry work needs to focus on tech/science Recognize regional connections and economies 18

Progress and Postulates: Seeds of Opportunity in Tehama County and the North State Corning, CA April 23, 2013

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