10
KERN BUSINESS JOURNAL
OCT/NOV 2012
Economic Outlook
Kern County enjoys strong 10-year run By Mark Evans
How far has Kern County’s economy traveled in the past decade? How much success have we had “digging out” from the Great Recession? Where are we headed? We’ve had a good 10-year run. IHS Global Insight estimates that Kern County’s growth rate from 2001 to 2011 will average 7.0 percent, the 12th highest rate among metro areas. Fresno ranked 141; Modesto, 208; Stockton, 205; and Sacramento, 181. Kern’s private sector employment grew by 11.4 percent over this period. While Kern ranked eighth among the largest Mark Evans 100 metros in this regard, Fresno ranked 36; Modesto, 74; Stockton, 50; and Sacramento, 77. Despite a 27 percent increase in Kern’s population between 2000 and 2010, income grew sufficiently to increase per capita income by 38 percent, compared to the state average of 27 percent. Median household income increased by 23 percent, the same as for California. Bakersfield’s recovery from the Great Recession also has been relatively strong. The Brookings Institution’s MetroMonitor ranks Bakersfield’s recovery as the 22nd strongest among the 100 largest metros. Fresno ranks 99; Modesto, 93; Stockton,
68; and Sacramento, 92. Our 6.9 percent employment increase is the second largest increase among the top 100: Fresno ranked 82; Modesto, 98; Stockton, 16; and Sacramento, 88. While we are essentially the median city with respect to recovery of Gross Metro Product (rank of 51 out of 100), other valley cities are significantly below the median: Fresno ranked 82; Modesto, 85; Stockton, 98; and Sacramento, 95. Historically, Kern County’s economic performance paralleled the Central Valley’s. We need look no farther than our main economic drivers to explain why mediumterm growth and short-term expansion are outperforming the rest of the valley. GMP originating in the mining/energy sector more than tripled between 2001 and 2009, while ag-related GMP more than doubled. From April 2011 to April 2012, Bakersfield had the largest increase in manufacturing jobs among the top 100 metros (13.7 percent). Rather than being an independent source of strength, this reflects the strength of energy and agriculture. Two-thirds of the job increases were in nondurable manufacturing, which consists primarily of food processing and petroleum products. The Associated General Contractors of America reported that between June 2012 and June 2011, construction employment increased by 23 percent in Kern County – the largest increase in the nation - with
transportation infrastructure, healthcare, and school projects leading the way. Much credit can be given to the influx of federal funding into the Thomas Roads Improvement Program, named after former Congressman Bill Thomas.
Looking ahead Kern County residents share the nation’s trepidation. Cal State Bakersfield reported that after strongly increasing in the fourth quarter of 2011, consumer sentiment has settled at a bearish level. Likewise, the Kern County Business Outlook Index made no further improvement in the second quarter after recent modest gains. As Fed Chairman Bernanke emphasized in his July report to Congress, economic momentum is weakening and there are two main sources of risk: the Euro-area crisis and challenges Congress faces in reining in deficits over the medium term, while taking into account short-term economic fragility. The Congressional Budget Office estimates that a recession will occur in 2013 if Congress is incapable of reaching an agreement to prevent the spending reductions and tax increases scheduled to automatically go into effect. — Mark Evans is a professor and chairman of the Economics Department at Cal State Bakersfield.
From April 2011 to April 2012, Bakersfield had the largest increase in manufacturing jobs among the top 100 metros (13.7 percent). Two-thirds of the job increases were in nondurable manufacturing, which consists primarily of food processing and petroleum products.