Recession on the horizon? No, but don’t look for an economic recovery anytime soon
If you’re wondering if a national recession is around the corner, the answer is most likely no.
Don’t celebrate too quickly. One of Northern California’s top economists predicted Thursday that economic growth over the next two years will move at a snail’s pace.
Two factors are playing into that forecast, says Sonoma State University economist Robert Eyler.
“One is a lower level of labor productivity, which is starting to become a small concern for some economists who look at the future,” he said. “And the second is going to be relatively high inflation that's going to linger.”
Those were among the economic indicators Eyler shared during his June 1 presentation to a crowd of 150 people at the North Bay Business Journal’s 2023 Economic Outlook Summit held at Sonoma State University.
His data-driven presentation also included pressing North Bay economic trends and issues centered on housing, the labor force and commercial real estate, among others.
On the housing front, Eyler said interest rates will either plateau or come down over the next year, depending on moves the Federal Reserve makes.
But no matter what happens with the Fed, housing will remain a central policy issue long after our lifetimes, he said.
“If your intention is to live here (in the North Bay) for the rest of your time on this planet, that issue is not going away. I don't care how many houses you build,” Eyler said. “At some point along the way, you will run into some political issue, or you’ll run into some market issue that won't allow you to go any further and we’ll how that goes.”
Looking at commercial real estate, the outlook for the North Bay is a mixed bag, he added.
“We don't expect a lot of construction,” Eyler said. “We see prices kind of creeping up a little bit and vacancy creeping down a little bit, but not by much.”
The bigger question is how workplace trends around remote work will impact lease renewals, and that remains to be seen, he added.
North Bay Business Journal Publisher Lorez Bailey led a panel that explored creative solutions for the shortage of workers in the North Bay region.
Zachary Kushel, founder and managing partner of Marin Sonoma Impact Ventures, talked about how a robust entrepreneurial ecosystem can support workforce development.
“I think we've been too siloed,” said Kushel, whose firm helps startups with networking and financing needs. “Everything we do needs to be ecosystem driven. It needs to be regional. Approaches … that stop at the county lines are counterproductive.”
Kushel launched Marin Sonoma Impact Ventures in April 2020, forming it as a social enterprise, meaning it’s a for-profit business with a social mandate. In December, the Corte Madera-based firm announced its first effort, MSIV Fund 1, raised over $6.6 million from more than five-dozen investors, as the Business Journal reported at the time.
During the panel discussion, Kushel also said startup companies are generating the most job opportunities right now.
“If we want to solve the job-creation challenges we have in the North Bay, we believe very strongly that we need to support local entrepreneurs, who are going to go from a one- person to a three-person shop” and keep growing exponentially, he said.
Bruce Wilson, executive director of the Workforce Alliance of the North Bay, discussed several issues, including migration patterns that show fewer people available to fill growing numbers of jobs.
“It's a pretty profound problem that we have to deal with, and nobody really owns it — and shouldn't own it,” said Wilson, whose Napa-based organization also represents Marin, Mendocino and Lake counties.
Wilson described how bringing more voices to the table could help solve the problem long term.
“From a workforce standpoint, it's not an issue that starts at 16 years of age. You don’t just start training your workforce at that point,” Wilson said. “Third-grade reading scores have a huge correlation to success in the workforce. So why aren't we measuring that with our chambers of commerce jumping on board supporting our First 5 organizations?”
Wilson also suggested employers fill job vacancies by turning to untapped labor pools. They include veterans, people with disabilities, the younger population, and people for whom English is a second language.
“All of these groups are unemployed at a much higher rate than the general population,” Wilson said, whose Napa-based organization operates a network of career centers and employment and training programs. “There’s a lot of support and a lot of structure behind these groups. My organization, for instance, will pay an employer to essentially train (these people).”
