Dr. Jeffrey Michael. Director, Center for Business and Policy Research University of the Pacific

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1 2016 San Joaquin County Economic Outlook Dr. Jeffrey Michael Director, Center for Business and Policy Research University of the Pacific

2 U.S. and California Economic Outlook: Themes Strengths U.S. consumption should sustain growth. Gas prices & consumer debt low. Wages finally growing. Housing market has healed, construction will grow. Weaknesses Low labor force participation and inequality CA: cost of living, education performance outside Bay Risks Global: Slowing growth, geo-political uncertainty. Overdependence on Silicon Valley/SF boom.

3 California has added jobs faster than the US since 2013.

4 Job Growth Since 2007: 12 largest California metro areas. San Francisco San Jose Bakersfield San Diego Riverside/SB East Bay Fresno Los Angeles Orange Cty Stockton Ventura Sacramento 5.9% 4.3% 3.4% 3.4% 2.5% 1.7% 1.6% 1.0% 0.5% 8.7% 16.2% 20.2%

5 Job Growth Past 12 Months (source: CA EDD) Other data shows Stockton growing jobs at 4+% San Jose San Francisco Riverside/SB Stockton Ventura San Diego Sacramento Fresno Orange Cty Los Angeles East Bay Bakersfield 0.2% 1.7% 1.7% 2.9% 2.9% 2.7% 2.7% 2.6% 2.5% 3.5% 4.1% 5.1%

6 San Joaquin County recovered pre-recession level of jobs in Payroll Jobs (thousands)

7 Annual Percentage Change in San Joaquin County Jobs

8 San Joaquin Employment Changes By Industry Since Biggest Decreases in Employment 2007 to 2015 Construction -4,200 Manufacturing (biggest losses in building -2,800 materials, furniture, auto parts) Finance & Real Estate -2,400 Biggest Increases in Employment 2007 to 2015 Education and Health Services +5,500 Transportation and Warehousing +3,300 Hospitality +2,300

9 Average Wages (adjusted for inflation) declined from 2010 to 2014.

10 Real Per Capita (avg.) Income Grew Slowly while average wages declined. Real Per Capita (e.g. average) Income Steady as Avg. Real Wages Decreased Growing Non-wage income (investment/proprietor income, transfer payments) Growing Commuter income Increasing Inequality

11 Real Median Household Income Median household income declined significantly from 2008 to Reflects increasing inequality.

12 But 2015 Brought Significant Improvements to San Joaquin County Labor Market SJC average Wage Up 3.8% between June , significantly beating inflation for the first time since Middle Class Sectors Adding Jobs Again Construction State and Local Government Higher wages in low-paying industries Minimum wage increase, and strong agricultural economy

13 2016 SJ Labor Market Forecast Fastest Growing Industries Trade, Transportation, Warehousing: + 3,000 Government: + 2,500 Professional & Business Services: +1,500 Construction: +700 Continued Wage Growth Another minimum wage increase Tightening labor market for employers, County unemployment rate averages 8% for the year, compared to 17% in 2010.

14 San Joaquin County had fastest population growth rate in California the past 2 years. SJC Percent Change in Population Next fastest growth rates in the State are Alameda and Santa Clara Counties. Bay Area migration is back to levels.

15 San Joaquin County School Enrollment is Growing Again

16 Net Commuter Income Had Record Growth in

17 Home Values Relative to Income Have Never Been This High Without Sub-prime Lending $500 San Joaquin MSA Home Prices (in thousands), $450 $400 $350 $300 $250 $200 $150 $100 CPI Zillow CAR Median FHFA HPI $ Sources: Bureau of Labor Statistics, Consumer Price Index; Federal Housing Finance Agency, Regional House Price Index; California Association of Realtors, Historical Housing Data; Zillow.com Zindex

18 Households with Housing Costs Greater than 35%of Income

19 Percent of Housing Units that are Owner Occupied

20 Young Adults (25-34) Living with a Parent

21 Price and Income Changes Since 2000: Change since 2000 Inflation + 40% Income + 35% Home Prices + 60 to 80% Rent + 55 to 70% Building Costs?

22 San Joaquin County Housing Starts

23 San Joaquin County Farm Economy Continues to Be Strong $3,000,000 Thousands of dollars $2,500,000 $2,000,000 $1,500,000 $1,000,000 Total Revenue Net Farm Income Farm Labor Payments $500,000 $

24 Some big issues for the San Joaquin County economy over the next two decades. Water and Flood Control Post-bankruptcy Stockton Self-Driving and Electric Vehicles Renewed Population Growth Demographic Change Increasing Integration with Bay Area & NorCal Changes to Healthcare and Education

25 Conclusion: Best outlook in a decade Will Be 4 th Consecutive Year of Job Growth Exceeding 3% Early recovery was growth in low-paying jobs & stagnant wages. Recent gains in middle-class jobs, & improving wages. Population Growth and Housing Are Issues Again Growing Integration with Bay Area 1 st stage: Commuters 2 nd stage: Logistics Industry Next stage is harder: Integrating into the supply chain & knowledge economy.

2016 CALIFORNIA ECONOMIC & MARKET FORECAST. November 18, 2015 Newport Beach AOR Leslie Appleton-Young, Vice President & Chief Economist

2016 CALIFORNIA ECONOMIC & MARKET FORECAST November 18, 2015 Newport Beach AOR Leslie Appleton-Young, Vice President & Chief Economist New Legal Hotline App App Available NOW! The Future 2016 FORECAST