Economic indicators forecast continued growth for the North Bay in 2014, despite concerns about the ongoing drought, the state budget and a gap between the existing workforce and the need for skilled workers.
While the region's economy will continue to expand this year, there are signs that growth is peaking, economist Robert Eyler said Wednesday at the 2014 Sonoma State University Economic Outlook Conference.
The annual affair, the first major business event held in the university's new $62 million student center, drew about 350 people and included a keynote speech by California State University Chancellor Timothy P. White.
Eyler said the region's housing market showed rapid growth last year and commercial real estate demand is high, both positive signs. Interest rates are inching higher, another indication of growth.
State figures show the Sonoma County economy added 4,700 jobs during 2013, including the opening of the Graton Resort & Casino in Rohnert Park, the East Washington Place shopping center in Petaluma and The Barlow in Sebastopol.
But the drought — on the minds of the state's farming industry, governments, businesses and individuals — wasn't factored into the economic forecasting models, Eyler said.
Ongoing lack of water could change the dynamics of agriculture, construction, business growth and home sales, all strong drivers of the economy.
“It should put some pressure on ag prices to change, and usually that will take about a year to transmit,” Eyler said.
That could mean, for example, lower- to moderate-wage workers who already pay the costs of commuting might feel a strong pinch from higher food prices, which would mean less spending and ultimately slower hiring by businesses.
North Bay counties including Sonoma, Marin, Lake, Mendocino, Napa and Solano all showed solid economic signs for this year, he said.
In Sonoma County, unemployment fell to 5.7 percent in December as the jobless rate continued to decline to levels not seen since mid-2008. Statewide unemployment dropped to 8.3 percent in December, down from 9.8 percent a year ago, compared with the U.S. jobless rate of 6.7 percent in December.
Sonoma County continues to attract technology companies, while wine, tourism and services still play the largest part of the economy. Since 2012, job growth has been mainly in the service sector, Eyler said, but the construction industry is improving.
High-tech companies looking for potential sites in the North Bay sometimes complain about a lack of skilled workers in the area.
White, the CSU chancellor, said a $50 million initiative announced last month is meant to drive more students into college to meet the needs of employers.
It is also earmarked to hire more tenure-track faculty, electronic advising systems for students and more online courses and cross-campus programs.