Center for Strategic Economic Research
The Sacramento Region Business Forecast highlights the results of econometric models that analyze the relationship between indicators of economic performance, job growth, and unemployment rates in the six-county Sacramento Region (El Dorado, Placer, Sacramento, Sutter, Yolo, and Yuba Counties). Job growth, or the year-over-year growth rate in Nonfarm employment, is one of the best and most closely monitored measures of regional economic performance. Total Nonfarm employment is made up of 11 major industry sectors that group the Region’s establishments together based on similarity in business processes used to produce goods or services. The unemployment rate measures the extent to which residents are able to find employment opportunities, specifically capturing those individuals who are part of the labor force and are not working, but are able, available, and actively looking for work. A forecast of job growth, major sector performance, and unemployment rates provides the business and economic development communities an outlook for the Region’s economy 12 months into the future.

The Center for Strategic Economic Research (CSER) developed the forecast to serve as a forward-looking resource for the Sacramento Region’s business and economic development communities. It is currently the only locally-produced regional economic forecast for the six-county Sacramento Region.

FIRST QUARTER 2010 UPDATE

The first quarter 2010 update to the Sacramento Region Business Forecast shows that job growth in the six-county Sacramento Region will continue to improve over the next 12 months, moving back into positive territory by the end of the third quarter. The Region’s economy appears to have bottomed-out back in September 2009 and, following a brief period of worrisome rates of decline, has been on a general upward trajectory since. In the 12 months ending March 2010, the Region posted annual average job losses of 5.3 percent with significantly less severe rates of loss in the first quarter. At the statewide and national levels, job growth has also been improving considerably since September 2009 with both benchmarks outpacing the Sacramento Region in their recovery thus far. Annual average job growth over the coming 12 months (April 2010 to March 2011) will be notably better in the Region at -0.5 percent (equating to a loss of close to 4,200 jobs) with the 35-month period of consistently negative growth ending in September 2010. The forecast for March 2011, suggests that total Nonfarm employment in Sacramento will be about 0.8 percent higher than it is currently (March 2010), a modest level of positive growth not seen since 2007. This upturn is in line with business sentiment captured in the Sacramento Region Business Confidence Index that is now in positive territory and reflects expectations of better conditions in individual industries and the regional business climate overall in the short-term future.

Sacramento Region Annual Job Growth Outlook
April 2010 to March 2011 Forecast


Data Sources: Historical from CA Employment Development Department; Forecast from CSER Business Forecast model


Major Sector Annual Average Job Growth Outlook
Q2-10 to Q1-11 Forecast, Sorted by Sector Size


Data Sources: Historical from CA Employment Development Department; Forecast from CSER Business Forecast model

Nine of Sacramento’s 11 major sectors will see healthier job growth in the coming year compared to the past 12 months, including four of the Region’s largest. While only four of these nine sectors are forecast to experience average annual growth in positive territory, the others will see rates of job loss ease throughout the coming year. The most dramatic improvements among the decent-sized sectors are forecast in Manufacturing and Construction where double-digit rates of loss will taper off. Manufacturing will essentially see no growth with the turnaround in the broader economy while Construction will still see pretty severe losses as weaknesses remain in the housing and commercial real estate markets. Overall, the second quarter of 2010 will be the weakest for most sectors and the first quarter of 2011 will be the strongest. By the end of the forecast period, the Region’s total Nonfarm employment is expected to reach close to 857,000, similar to levels seen in early-2002 and around 96,000 jobs off the June 2007 peak.