What’s the forecast?

Local economist sees indications that our slowdown is slowing down

DATA HUB <br> As director of the Center of Economic Development through Chico State University, Dan Ripke processes a lot of information about the North State.

As director of the Center of Economic Development through Chico State University, Dan Ripke processes a lot of information about the North State.


How bad off are we? In the media and elsewhere along the information superhighway, a lot of economic chatter is swirling around. Some is based on data; some is speculative; some is wishful thinking. With so much to process, it can be tricky to tell the true state of the economy, particularly how it’s trending close to home.

That last part, of course, is an important gauge for everyone. What’s going on elsewhere affects what’s going on here, too, but the state of the local economy is truly the linchpin in people’s lives.

So, how bad off are we?

A good person to ask is Dan Ripke, 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 periodically testifies in the Legislature, Ripke tracks stats and formulates forecasts.

So, really, how bad off are we?

“It’s really tough,” Ripke said, stating what most of us experience daily … yet, what we may not see as clearly, is there are encouraging signs as well.

“We believe the worst in terms of the housing bubble bursting has occurred in this area,” Ripke said 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 big 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.

Crunching numbers

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.

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“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. Gottschalk and Circuit City chains) and small (e.g. Subway 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.

Upsides and downsides

There are other factors, 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.”