But California's recovery will remain 'painfully slow,' Wells Fargo says
ORIGINALLY PUBLISHED MARCH 2, 2011 AT 6 A.M., UPDATED MARCH 1, 2011 AT 6 A.M.
Job growth in San Diego and Orange counties will help lead California into economic recovery, but the statewide growth rate will remain "painfully slow," according to a study released Tuesday by the economics group at Wells Fargo Securities.
"While California's economic performance is expected to improve a touch in 2011, the state will continue to perform somewhat below the national average," wrote Wells Fargo economist Scott Anderson.
Anderson noted that San Diego has had a modest improvement in its job market over the past year - outpacing both Los Angeles and the San Francisco Bay Area - with the addition 3,300 new workers in healthcare and 800 in professional, scientific and technical services and 4,100 temporary workers.
In addition, he said tourism should start injecting more money into the local economy in 2011, thanks partly to the construction of a new cruise ship terminal.
"Rising hotel room rates and occupancy rates are already visible," he said.
On the other hand, Anderson noted that the county only managed to bring down its jobless rate by 0.2 percentage points over the past year to 10.1 percent, dragged down by the loss of 2,600 construction jobs, "illustrating the 'treading water' nature of the jobs recovery so far."
In addition, he said, San Diego's housing market "remains far from normal and a true bottom appears a way off." Even though the median home price is 1.7 percent ahead of last year, he said, the pace of growth is slowing down and "further price declines are expected in the months ahead." After the Northern California Wine Country and Orange County, San Diego has the state's third-highest inventory of homes to be sold: 5.9 months' worth of detached homes, compared to a statewide average of 5.0 and as low as 3.4 in Sacramento or 3.8 in San Francisco.
The report also warned that San Diego's economy could be damaged by expected cuts in Pentagon procurement spending, although it may also benefit from Navy cutbacks, because ships may be relocated here as operations are streamlined in other areas.
On a statewide basis, Anderson predicted that jobs will grow 1 percent this year, bringing the unemployment rate below 12 percent. But he added that "jobs and unemployment across the state will remain the biggest economic problem for the state's policymakers."
