napa economic summit: the economy 2012: napa, north bay and beyond napa, caoctober 28, 2011 robert...
TRANSCRIPT
Napa Economic Summit:The Economy 2012: Napa, North Bay and Beyond
Napa, CA October 28, 2011
Robert Eyler, Ph.D.Professor, Economics
Frank Howard Allen Economics Research FellowDirector, Executive MBA Program
Sonoma State [email protected]
1
Current State of Affairs• 2011 was a year of mixed signals • Global: Europe, geopolitical uncertainty
– May change tourism over time
• National: Recovery underway, slow from jobs weakness– May change both wine sales and tourism
• State: Revenue generation and public workers• Local: Recovery slow and needs a jump start
Policy Issues• How do we create jobs through Congress?
– Temporary versus permanent job creation– Cost recovery versus investment
• Credit Supply Issues: reticence to lend– Riskiness in Europe not helping
• Credit Demand Issues: reticence to borrow– Interest rates low and stable as a result
• FED declaration on rates only as good as expected inflation
3
Excess Reserves at U.S. Banks (Loanable Funds Not Lent), 2008$Jan 2000 - Aug 2008
0
2
4
6
8
10
12
14
16
18
Month
Bil
lio
ns
of
$
4Source: Federal Reserve Board
0
200
400
600
800
1000
1200
1400
1600
1800
Billi
ons
of $
Excess Reserves at U.S. Depository Institutions (Loanable Funds Not Lent)2008$, Jan 2008 - Present
5Source: Federal Reserve Board
6Source: Federal Reserve Board
0
200
400
600
800
1000
1200
1400
1600
1800
Jan-
97M
ay-9
7Se
p-97
Jan-
98M
ay-9
8Se
p-98
Jan-
99M
ay-9
9Se
p-99
Jan-
00M
ay-0
0Se
p-00
Jan-
01M
ay-0
1Se
p-01
Jan-
02M
ay-0
2Se
p-02
Jan-
03M
ay-0
3Se
p-03
Jan-
04M
ay-0
4Se
p-04
Jan-
05M
ay-0
5Se
p-05
Jan-
06M
ay-0
6Se
p-06
Jan-
07M
ay-0
7Se
p-07
Jan-
08M
ay-0
8Se
p-08
Jan-
09M
ay-0
9Se
p-09
Jan-
10M
ay-1
0Se
p-10
Jan-
11M
ay-1
1Se
p-11
Bil
lio
ns o
f 2008$
Month
Excess Reserves at U.S. Depository Institutions (Loanable Funds Not Lent)2008$, Jan 1997 - Present
Source: BEA (www.bea.gov)
8Source: BEA (www.bea.gov)
9Source: BEA (www.bea.gov)
10
California• 2011-12 likely to be slightly better than 2010-11• Labor market still the big deal, and will remain in 2012• CA slowly bifurcating in terms of housing markets
– Interior valleys: Japanese-like recovery– Wine country: general economic recovery and conversion of
emerging world wealth to local housing/services demand• California’s recovery hinges on two major factors
– The expansion of the tech industry and it remaining here– How state government intends to fund itself
Source: BEA (www.bea.gov)
Source: BEA (www.bea.gov)
13
TechPulse Index, Index (Jan 2007 = 100), 1990-Oct 2011
Source: FED SF and Federal Reserve
Napa County and the Region• Napa has a place of economic strength in region
– Creating jobs in wake of recession– Tourism and wine to be the long term niche
• Need to continue to strengthen this niche– Northern and Southern Napa working in cohesion– Market to emerging world wealth: go to NVC for
Mandarin!• Competition is regional and growing
14
15
Employment, Seasonally Adjusted, 1990 – Aug 2011, Index 1990 = 100
Sources: EDD and CREA at SSU
Sources: BLS and CREA at SSU 16
New Unemployment Insurance Claims, Index (2002= 100)
17
Companies Gained and Lost, Napa County, 2006-11 and 2009-11
Sources: EDD and CREA at SSU
18
Jobs Gains and Losses, Napa County, 2006-11 and 2009-11
Sources: EDD and CREA at SSU
Local Housing Market Recovery: Keys• Job creation in technology industries• National economic recovery continuing• Recognition housing needs to follow general
economic recovery, and will not drive it• International audience for real estate welcomed
and marketed
19
Median Price of Existing Detached HomesNapa County, August 2011: $354,760, Down 10.0% YTY
$0
$100,000
$200,000
$300,000
$400,000
$500,000
$600,000
$700,000
$800,000Ja
n-90
Jan-
91
Jan-
92
Jan-
93
Jan-
94
Jan-
95
Jan-
96
Jan-
97
Jan-
98
Jan-
99
Jan-
00
Jan-
01
Jan-
02
Jan-
03
Jan-
04
Jan-
05
Jan-
06
Jan-
07
Jan-
08
Jan-
09
Jan-
10
Jan-
11
Jan-
12
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®
SOURCE: California Association of REALTORS®
County Aug-10 Jul-11 Aug-11Lake 74% 73% 64%Marin 29% 25% 28%Mendocino 52% 61% 48%Napa 39% 51% 48%Solano 67% 70% 71%Sonoma 41% 46% 42%CALIFORNIA 44% 43% 44%
Distressed Sales by County(Percent of Total Sales)
Where are we headed?• Recession-like activity through mid-2012 in
labor markets• Napa showing overt signs of recovery
– Maybe best in region• Recognize regional connections/economies• No signs of rapid recovery yet
– Economy to grow through 2012– Napa well poised for the long term
22