County economy stable, report says

Sonoma County's $18.5 billion economy is more stable than at any time since 2001, despite a slump in the housing sector, according to a report Tuesday from Moody's Economy.com.

Technology, wine and tourism are growing, in part because of the weak U.S. dollar, the report said. The currency's low value encourages exports and makes U.S. destinations a bargain for foreign travelers, said Moody's analyst Steve Cochrane.

He also pointed to falling vacancy rates for office and industrial space in Sonoma County.

"Looking forward, there's a lot to be excited about with the local economy," said Ben Stone, executive director of the county's Economic Development Board, which commissioned the Moody's report. "There's a light at the end of the tunnel."

But Robert Eyler, chairman of the economics department at Sonoma State University, said the housing downturn could put a damper on growth. "My picture of the economy is not as rosy," he said.

Sonoma County is likely to feel the impact of job losses in real estate, finance, construction and other employment categories related to housing. The slump in that sector will cut into local spending, Eyler said.

"I don't think there's cause for general alarm, but we'll feel the reverberations," he said.

The Moody's report acknowledged the housing downturn, naming it the biggest short-term risk to the economy.

Sonoma County has lost 450 jobs in the financial services industry alone as mortgage lending declined. Median home prices are down more than 5 percent from last year, and the correction "is likely to extend well into 2008," according to Cochrane.

Still, the slump has made homes more affordable and spurred a hot rental market, he said.

Most of Sonoma County's basic industries are poised for growth, Cochrane said. The report forecasts unemployment will decline starting in 2009, and the value of goods and services will increase 2 percent to 3 percent a year.

Sonoma County also will see a change in the trend of workers leaving the county for higher-paying jobs, the report said.

There's been a net loss of workers since 2002 as good-paying jobs disappeared. Starting in 2008, there will be a net gain in workers as the economy expands, according to the report.

Global demand for telecommunication products is driving growth in the technology sector, Cochrane said.

Sonoma County's lodging industry is reporting occupancy rates close to 70 percent, despite adding 2,500 new rooms in recent years.

The wine industry survived an oversupply from a record grape crop in 2005 and now is benefiting from a strong export market, the report said.

You can reach Staff Writer Steve Hart at 521-5205 or steve.hart@pressdemocrat.com.