Sonoma County is emerging from recession according to a county report that predicts the economy will grow at a moderate rate in 2010 before undergoing stronger growth in 2011.
Buoying the improvement will be the wine and technology sectors, said Ben Stone, executive director of the Sonoma county economic development board. “The county will maintain its high quality of life and desirability for high-skilled and high-earning workers,” he said. “However, high costs will keep the county from being more than an average performer.”
The EDB’s Winter Local Economic Report 2010 was released last week. As part of the guarded but positive outlook for the local economy, it said job loses have slowed sharply in recent months, particularly in the hospitality and financial services fields. The housing market is another area of recent improvement.
According to the report, the wine industry this year will move beyond the downturn suffered during the recession. While total U.S. wine sales for 2009 will have fallen by as much as 8%, sales did begin to increase slightly in the second half of the year. Helping to boost sales have been an increase in U.S. consumer confidence and growing demand in Asia.
Lower prices for fine wine grapes will fuel increased wine sales next year, although, the report said, at the expense of lower profits for wine grape growers in the country.
Looking longer term, wine growing will continue to support visitor-dependent industries in Sonoma County. The report noted that during the recession, several wineries took advantages of lower construction and property costs to expand and build new tasting room — a plus for local hotels.
The report predicts that Sonoma County tech sector will improve in 2010. Venture capital has started to flow back in the country’s telecom equipment and medical devices companies. Additionally, local telecom companies should benefit from the $7.2 billion in available federal stimulus spending for broadband infrastructure.
On the housing front, the local market will weaken in the first half of 2010 before improving at a sustainable pace. Even though house prices in the county have increased since the beginning of the year, according to the California Association of Realtors, late-state mortgage delinquencies and foreclosures have also increased. As a result, the growing pipeline of distress house sales will combine with additional job losses to push house prices down by 8% from current levels through the middle of next year. House prices will increase in the second half of next year, although they will not reach current levels until the middle of 2011.
The county’s industrial real estate market will take longer to recover. Commercial vacancies have risen to more than 15 percent, up from 11 percent at the end of 2007, according to Keegan& Coppin Co. Correspondingly, the issuance of industrial construction permits has fallen, limiting the pipeline of new buildings and reducing demand for construction workers.
The winter economic report was prepared by The Sonoma County Economic Development Board in partnership with the Sonoma County Workforce Investment Board, with research provided by Moody’s Economy.com and other sources.
