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.

THIRD QUARTER 2009 UPDATE

The six-county Sacramento Region’s job growth will bottom-out and the annual rate of loss will begin to improve over the next 12 months. Over the 12 months ending September 2009, the Region experienced annual average job growth of -4.5 percent—this rate will improve slightly to -4.4 percent in the forecasted 12 months ending September 2010, reflecting an annual average loss of about 39,000 jobs. Following the brief period of stability seen in the past couple months, Sacramento’s job growth will take another dip in the fourth quarter of 2009 with job growth falling to a low of -5.5 percent (lower than rates seen in over 20 years). After this downturn, the rate of job losses will ease gradually through the third quarter of 2010 with job growth moving up to -3.6 percent. While the forecast shows general improvement in the Region’s economy during the next 12 months, the recovery back to positive growth on a consistent basis will likely be lengthy .

Sacramento Region Annual Job Growth Outlook
October 2009 to September 2010 Forecast


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


Major Sector Annual Average Job Growth Outlook
Q4-09 to Q3-10 Forecast, Sorted by Sector Size


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

Five of the Sacramento Region’s major sectors will see conditions improve in the next 12 months compared to the past year. In addition to the large Trade, Transportation, & Utilities; Professional & Business Services; and Leisure & Hospitality sectors, the smaller Financial Activities (banks, insurance, and real estate) and Other Services (basically maintenance/repair, personal services, and non-profits) sectors will experience less severe rates of loss in the coming 12 months. The remaining six sectors are all forecast to post weaker performance in the next 12 months. This includes the Construction sector, a driver of the current recession that has seen job growth steadily decline for almost two and a half years. Things will likely not get better in this sector in the next year with continued weak rates of job loss as the housing market slowly recovers and the commercial market takes a dip. Most major sectors will see the poorest performance in the first quarter of 2010 while, by the third quarter, many sectors could see improved conditions.