urban_encounter
Feb 16, 2007, 3:24 PM
Government is city's engine
Rising tide should help law firms,
lobbyists and other cottage industries
By Dale Kasler - Bee Staff Writer
Published 12:00 am PST Friday, February 16, 2007
Story appeared in BUSINESS section, Page D1
Sacramento's economy will grow more quickly than any other major metropolitan area in California over the next decade, a leading private economist says.
One of the big reasons why may surprise you.
For all of Sacramento's efforts to diversify its economy, the region's old reliable industry -- state government -- will be one of the leading growth engines between now and 2015. After several years of deficits, hiring freezes and downsizing, the state will hire in earnest to keep up with California's exploding population and infrastructure needs, according to the report by Stephen Levy, director of Palo Alto's Center for Continuing Study of the California Economy.
The private sector will be a major part of this, he said. The cottage industries that serve government -- law firms, lobbyists and so on -- will mushroom to keep up with the state's hiring, particularly as California implements billions of dollars in planned infrastructure improvements.
"The state is going to be putting out a ton of money," Levy said in an interview. "State government is the gorilla of the economic base."
The Sacramento region does faces hurdles, however, including a downturn in the housing market that's dragging down job growth. But experts like David Lyons agree the area will be one of the leading lights of the California economy over the long run.
Lyons, labor market consultant with the state Employment Development Department, agreed the region will see a substantial increase in hiring related to state government. "We have seen a big movement of lobbyists open up shop," he said. "It seems to be on the rise."
Levy said other factors will generate jobs for greater Sacramento, including continued population drift from the Bay Area.
All told, the Sacramento region will record job growth of 21.7 percent from 2005 to 2015, generating about 200,000 new jobs. By contrast, the job growth rate will be 17.3 percent statewide and 13.4 percent nationally, according to a report Levy's center is releasing today.
Sacramento's predicted growth will top every other metro area in California. No. 2 is San Diego, at 20.7 percent, followed by the Bay Area at 19.1 percent.
Levy's prediction comes as the Sacramento region, hobbled by the end of the housing boom, is experiencing something of a slowdown.
Although the area's unemployment rate is a healthy 4.3 percent, the rate of job growth has diminished in recent months. Payrolls are growing at an annual rate of 1.6 percent a year, compared with more than 2 percent a few months ago. Still, Sacramento's job growth is better than the statewide average of 1.1 percent.
In a separate report released Thursday, the California Budget Project warned that the housing slowdown could "have a significant impact on the state's budget." The group said a weaker housing market will dampen consumer spending and tax revenue.
Nonetheless, Levy said Sacramento will benefit in the long run by a slowdown in the housing market. Before the correction hit, the region's housing prices had soared to 80 percent above the U.S. average, a level that would eventually choke off growth, he said. With prices subsiding, Sacramento will regain some of its competitive advantages over coastal California, he said.
With moderating housing prices, "the old advantage of the quality of life, and being attached to the Bay Area, is still there," Levy said.
Yet the state's chief economist, Howard Roth, said Sacramento eventually will bump up against growth limitations.
Although he agrees that Sacramento will be among the growth leaders in California, "I don't know how long that's going to last," he said. "You reach a certain point where you get pretty crowded."
Rising tide should help law firms,
lobbyists and other cottage industries
By Dale Kasler - Bee Staff Writer
Published 12:00 am PST Friday, February 16, 2007
Story appeared in BUSINESS section, Page D1
Sacramento's economy will grow more quickly than any other major metropolitan area in California over the next decade, a leading private economist says.
One of the big reasons why may surprise you.
For all of Sacramento's efforts to diversify its economy, the region's old reliable industry -- state government -- will be one of the leading growth engines between now and 2015. After several years of deficits, hiring freezes and downsizing, the state will hire in earnest to keep up with California's exploding population and infrastructure needs, according to the report by Stephen Levy, director of Palo Alto's Center for Continuing Study of the California Economy.
The private sector will be a major part of this, he said. The cottage industries that serve government -- law firms, lobbyists and so on -- will mushroom to keep up with the state's hiring, particularly as California implements billions of dollars in planned infrastructure improvements.
"The state is going to be putting out a ton of money," Levy said in an interview. "State government is the gorilla of the economic base."
The Sacramento region does faces hurdles, however, including a downturn in the housing market that's dragging down job growth. But experts like David Lyons agree the area will be one of the leading lights of the California economy over the long run.
Lyons, labor market consultant with the state Employment Development Department, agreed the region will see a substantial increase in hiring related to state government. "We have seen a big movement of lobbyists open up shop," he said. "It seems to be on the rise."
Levy said other factors will generate jobs for greater Sacramento, including continued population drift from the Bay Area.
All told, the Sacramento region will record job growth of 21.7 percent from 2005 to 2015, generating about 200,000 new jobs. By contrast, the job growth rate will be 17.3 percent statewide and 13.4 percent nationally, according to a report Levy's center is releasing today.
Sacramento's predicted growth will top every other metro area in California. No. 2 is San Diego, at 20.7 percent, followed by the Bay Area at 19.1 percent.
Levy's prediction comes as the Sacramento region, hobbled by the end of the housing boom, is experiencing something of a slowdown.
Although the area's unemployment rate is a healthy 4.3 percent, the rate of job growth has diminished in recent months. Payrolls are growing at an annual rate of 1.6 percent a year, compared with more than 2 percent a few months ago. Still, Sacramento's job growth is better than the statewide average of 1.1 percent.
In a separate report released Thursday, the California Budget Project warned that the housing slowdown could "have a significant impact on the state's budget." The group said a weaker housing market will dampen consumer spending and tax revenue.
Nonetheless, Levy said Sacramento will benefit in the long run by a slowdown in the housing market. Before the correction hit, the region's housing prices had soared to 80 percent above the U.S. average, a level that would eventually choke off growth, he said. With prices subsiding, Sacramento will regain some of its competitive advantages over coastal California, he said.
With moderating housing prices, "the old advantage of the quality of life, and being attached to the Bay Area, is still there," Levy said.
Yet the state's chief economist, Howard Roth, said Sacramento eventually will bump up against growth limitations.
Although he agrees that Sacramento will be among the growth leaders in California, "I don't know how long that's going to last," he said. "You reach a certain point where you get pretty crowded."