Friday, January 25, 2008

Recession Likely To Hit County Hard, Expert Says

Recession Likely To Hit County Hard, Expert Says
By RACHEL RASKIN-ZRIHEN/Times-Herald staff writer
Article Launched: 01/25/2008

If a recession hits the state this year, it will likely impact Solano more than most other Bay Area counties, an economic forecaster said Thursday.

Worrying about it, however, could make matters worse, said Hing Wong, a senior regional planner with the Association of Bay Area Governments, which released the forecast. ABAG is the official regional planning agency for the Bay Area's 101 cities and towns, and nine counties.

"If people over-react, it could exacerbate the problem," Wong said. Curtailing spending, for example, will only worsen the situation, by further depressing the economy, he said.

Contrary to earlier economic forecasts, predicted booms in population and jobs in Solano County have not materialized, Wong said. The high number of home foreclosures here may help explain why, he said.

"Solano County's foreclosure rate is the worst in the nine Bay Area counties," Wong said.

In the fourth quarter of 2006, 781 Solano County homes were foreclosed on, Wong said. That number more than doubled last year to 1,793, he said.

With Solano's tax base suffering especially deeply from lost property tax revenues and its less-than-expected growth, the Vallejo area likely will suffer more from a recession, and feel impacts longer, Wong said.

"I think what's happening is that Solano County is one that might feel the effect of a recession more sharply than other parts of the Bay Area, and it will take a little longer to recover," Wong said.

Vallejo Chamber of Commerce president Rick Wells said he thinks the county's diverse economy will help shelter it from the worst of any recession.

The Bay Area economy is expected to show slow job growth with a possible recession on the horizon in 2008 and then improve in 2009, said Paul Fassinger, ABAG's economist and research director. The remarks were made during the association's 20th annual regional economic outlook conference Thursday.

"Energy prices, mortgage industry, and the state budget continue to cause concerns about their impact on our region's economy," Fassinger said. These projections and other budget concerns were presented to more than 200 conference attendees representing local government, regional agencies and business.

Job growth is expected to slow Bay Area-wide, though more profoundly in Solano County than elsewhere, Wong said. Job growth and the economy in general here have been slowing since 2004, he said.

"Both the state and national economies will experience a weak year in 2008, with the California and national housing sector slumps showing no signs of abating at year-end, said Howard Roth, chief economist of the California Department of Finance who provided the broader California outlook at the conference. Roth said he thinks there's about a 40 percent chance of a recession this year, while Fassinger is "a little less pessimistic," Wong said.

"Best case is that economic growth will stabilize at a low level by the end of 2008, but the major risks affecting this outlook are higher energy prices and whether the housing sector downturns turn out worse than expected."

The next few months will tell, Wong said.

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