How bad off are we?
Local economist: slowdown showing signs of slowing down
When it comes to economic news, print and broadcast reports have painted a dire picture. Just last week, our local daily paper reported on its front page—under the headline “Butte jobless rate one of the worst in the nation”—that unemployment in the Chico area was the 12th highest nationally. (More recent, less frightening percentages appeared in the story’s continuation, on page 7.)
Point is, a lot of data are whirling around, so it can be tricky to tell the true state of the economy, particularly how it’s trending close to home. That’s an important gauge for everyone, of course, but especially so for job-seekers hoping to land stable work.
So how bad off are we?
According to Dan Ripke, “it’s really tough,” yet there are encouraging signs as well.
Ripke is director of the Center for Economic Development and state director of the Northeastern California Small Business Development Center, both through Chico State University. Along with economists such as Dr. David Gallo, who testified in the Legislature this week, Ripke tracks stats and formulates forecasts.
“We believe the worst in terms of the housing bubble bursting has occurred in this area,” Ripke said Monday (May 4) during a sit-down in his downtown Chico office. “Butte County has corrected quite a bit, and we’re back to normal, price-wise. That’s the good news.
“The bad news: Consumer confidence is still a bit shaky. People are concerned about their job, concerned about their bank, concerned about their stocks.”
In terms of recession versus depression, “we haven’t felt it anywhere as bad as we could,” he continued, “yet we’re still fearful of how the economy will go. That degree of insecurity influences our willingness to spend money, and that influences everything. It’s a tricky thing because the economy is so intertwined within itself.”
Let’s look at a few significant threads.
Employment—and unemployment—numbers are important indicators because of the ripple effect of spending. How those figures get parsed is crucial, though. At CED, Ripke said, “we tend not to focus too much on monthly unemployment because it fluctuates so much. Ag counties can be double or triple what the national average is on a month-by-month basis. Students not going to school get thrust into the job market, and that can affect unemployment those months. It’s like looking down at your feet instead of looking at the horizon.”
CED reads the numbers like a doctor looking over an EKG test—checking for changes over the long run rather than just February compared to December. That analysis still isn’t optimistic, but not entirely pessimistic.
“The last six to 18 months, we’ve seen a dramatic decline in construction and construction occupations in the area,” Ripke noted. Along with business closures large (e.g., Gottschalks and Circuit City chains) and small (e.g. Quiznos and Black Crow eateries), “we’re starting to see a contraction of the economy, and as people adjust their spending behavior, that will continue to cause more pain”—and, as a result, tighten the job market.
However, a cash infusion is coming: the federal economic stimulus. “That will start to hit the street in the next three to six months,” Ripke said, “and we should start to see a positive economic impact soon after that. That’ll help to spur people’s confidence because they won’t see or hear so much about business closures, and we’ll see more unemployed people absorbed back in the work force.”
And yet, expansion is tricky. As Gallo points out in a report he shared with legislators, not only have banks been less willing to extend loans/credit, property owners—even in this market—have less equity to borrow against, so even the most rosy-glassed, aggressive entrepreneurs face challenges creating new opportunities.
Students are feeling intertwined effects, too. Funding for higher education keeps getting cut by the state. “Ironically,” Ripke said, “in this area we’re seeing more people go back to school.” That could be a boon “in the medium term” as the area will boast “a better-trained workforce.”
Another encouraging sign in Ripke’s eyes: “It seems that all the banks here locally are stable.”
Less encouraging: In retail projections, which cities make to keep on top of sales-tax revenues, “numbers are starting to go down.”
So, culling various bits of data, what’s the bottom line? Here’s Ripke’s forecast for Butte County residents:
“In the short term, you shouldn’t expect a quick turnaround. What we’re starting to see is a decrease in the rate of decline, but not a recovery.”