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Welcome Northern Central Coast Economic Vitality Conversation September 10, 2004 Santa Cruz County Business Council Central Coast Partnership San Benito County Business Council Made possible through generous support from Pacific Gas and Electric Company The Northern Central Coast (NCC) An Economic Perspective NCC: Diversity in a Small Area The three contiguous counties are part of two economic planning regions, and depend upon activities that range from rural agriculture to high technology manufacturing and services. ESP Regions Economic Influences on the NCC The National (and Global) Economy The State Economy Central Coast Region (& San Francisco Bay Region) Trends National Economic Conditions Modest output growth (2.8 % real GDP in 2004:2) Productivity gains (2.5% in 2004:2) Excess capacity (only 77% vs. 83%+ in 1990s) Weak job growth (slowest since Depression) Rising unit labor costs (benefit cost hikes) Higher oil prices (less acute, but more chronic?) High debt levels, and rising interest rates California A slow recovery, matching the nation CA-U.S. unemployment rate gap shrinking Job losses during 2001-2003 concentrated in Bay Area manufacturing Funding constraints will limit government job growth and any fiscal stimulus Population growth (tax receivers vs. taxpayers) California offers employers a large market, but a relatively high cost of business California Nonagricultural Jobs 14,800,000 14,700,000 14,600,000 14,500,000 14,400,000 14,300,000 14,200,000 J -0 an 1 1 2 3 4 1 2 3 -0 l-01 t -0 -02 r-0 l-02 t -0 -03 r-0 l-03 t -0 -04 r-0 l-04 r Ju Oc Jan Ap Ju Oc Jan Ap Ju Oc Jan Ap Ju Ap Where is the job recovery ? Lost to productivity gains (capital substitution) Lost to cost and price pressures on businesses Offsetting rising labor costs (health & benefits) Going offshore Waiting for employer confidence to return Moved out of California Regional Trends Job Growth by Region Growth in Total Jobs 1990-2003 SoCal 8.2% 11.2% Bay Area California 14.6% N. California 15.2% 16.4% U.S. 20.5% Coast 24.9% Valley N. Sacramento 25.0% Border 25.2% 28.7% Sierra Sacramento 0% 31.6% 5% 10% 15% 20% (Percent Change) 25% 30% 35% Jobs During Business Cycles Growth in Total Jobs 25% 20% (Percent Change) 20.5% 18.7% 16.4% 14.7% 17.4% 13.1% 15% 10% 4.2% 5% 1.5% 0.0% 0% -5% -0.2% -2.1% 1990-1994 1994-2000 Central Coast -1.2% 2000-2003 California U.S. 1990-2003 C.C. Job Growth by Industry Job Growth in Leading Major Industries 1990-2002 Manufacturing -5.1 2.1 Other Svcs. Wholesale Trade 2.4 Professional & Technical Svcs. 4.3 6.0 Administrative & Waste Svcs. Retail Trade 8.2 9.1 11.5 Accommodation & Food Svcs. Health Care & Social Assistance 12.2 Ag., Forestry, Fishing & Hunting 17.1 All Government -10 -5 0 5 (Thousands) 10 15 20 Over-Represented Industries (Percent of Total Jobs in 2002) Above-Average Share in CC 25% 19.9% 20% 16.5% 15% 12.3% 10.6% 10% 5% 11.3% 10.7% 7.8% 2.6% 0.6%0.4% 0% Ag., Forestry, All Government Accommodation Fishing & & Food Svcs. Hunting CC California Retail Trade Utilities (Percent of Total Jobs in 2002) Under-Represented Industries Below-Average Share in CC 12% 11.0% 10% 8% 6% 4.4% 3.4% 4% 2% 6.4% 6.1% 1.8% 4.1% 6.7% 4.2% 2.7% 0% Information Wholesale Trade Professional & Administrative Technical & Waste Svcs. Svcs. CC California Manufacturing Income Growth by Region Per Capita Income 1990-2001 72.9% Bay Area Border 56.9% 55.4% U.S. Sacramento 48.8% California 48.2% 46.0% Central Coast 44.2% No. California 42.8% No. Sac. Valley Central Sierra 39.5% SoCal 37.6% Cal CPI 34.6% 30.2% Valley 0% 15% 30% 45% (Percent Change) 60% 75% 90% NCC Unemployment Rates Counties are near or above the state rate. California, 6.5% (July 04) Monterey, 7.4% San Benito, 8.3% Santa Cruz, 6.3% …However, wide variances among local areas. Unemployment Among Regions Change in Unemployment Rate 2000-2003 Central Sierra 0.7% Central Coast 0.9% No. California 0.9% Border 1.0% Valley 1.0% 1.1% 1.3% No. Sac. Valley SoCal 1.4% Sacramento 1.8% California 2.0% U.S. Bay Area 4.1% 0% 1% 2% 3% 4% 5% Monterey County Large amounts of seasonal activities, such as agriculture, tourism, fishing. World-famous tourism destination, 100 mi. of coastline 3rd highest agricultural producer in CA Low unemployment in Monterey and coast (4-7%); high rates at inland areas (15-20%). Historical dependence on military. Former Fort Ord base now being developed. Home of Monterey Bay Aquarium and Research Institute San Benito County Historically, an agricultural county. Government is the largest employer. Two-thirds of population in Hollister Per capita personal income 2/3 of state average. Persons per square mile about 40 (vs. 220 for CA) Growth is increasingly tied to employment in Santa Cruz, Monterey, and Santa Clara. Residential development providing economic stimulus. Santa Cruz County 2nd smallest California county, after SF. Proximity to Silicon Valley. Moderate unemployment near Santa Cruz and Scotts Valley (5-7%); higher south (Watsonville, 15-20%). Per capita personal income 115% of CA average. Revenues and seasonal unemployment due to agriculture, recreation, and tourism. Government is the largest employer. Economic Vitality Conversation Today’s Focus 1. What state actions will have the most immediate positive impact on California’s economic recovery? 2. What state actions will result in the most significant long-term improvement to California’s economic competitiveness and comparative advantage? 3. How do we best structure an effective partnership between the regions and the state around economic strategy?