Upbeat about the economy? You must not live in Sacramento

Sacramento BeeFebruary 8, 2011 

SACRAMENTO — Suddenly it's as if Sacramento's economy were the worst anywhere. Or at least close.

Last week Forbes magazine ranked Sacramento fifth on its annual list of the "20 most miserable cities" in the country. A couple of days later, the U.S. Bureau of Labor Statistics revealed that Sacramento's job performance last year was the worst among the nation's major metro areas.

Another study last week suggests that, based on postings of Internet help-wanted ads, Sacramento has the nation's third-weakest job market, worse even than Detroit.

By any of these three measures, the area is still struggling. Even though California has finally climbed out of the recession, some economists aren't so sure about Sacramento.

"If there's anywhere in California that's still in it, Sacramento's the place," said Jeff Michael, director of the Business Forecasting Center at the University of the Pacific.

The problem: Sacramento's two main economic engines, government and real estate, continue to sputter.

The housing market is still in trouble; the region's construction industry lost another 4,700 jobs last year, more than any other sector.

The state's estimated $25 billion budget deficit is holding back Sacramento, too. Although the state hasn't yet imposed layoffs, furloughs have taken a big bite out of household incomes. Local governments are bleeding. Gov. Jerry Brown's austerity budget, which proposes to slash billions in spending, will cause more pain.

Vendors who sell to the state – a big slice of Sacramento's private sector – are already hurting.

Gloria Freeman, head of a Rocklin temporary agency called Staff USA Inc., said she's getting less business from the state. When she does get work, the state stretches out payments for months.

"It affects the whole economy," she said. "I had to cut back staff."

Among the reports portraying Sacramento as a mess, the Forbes misery index is drawing the most attention. Even though Sacramento made the list last year, at No. 17, the No. 5 ranking sent leaders scrambling for a response.

"With all this sunshine it feels nice to be in sac right now! No misery here," Sacramento Mayor Kevin Johnson said in a Twitter message.

Barbara Hayes, chief executive of the Sacramento Area Commerce and Trade Organization, said the Forbes coverage won't make it harder for SACTO to recruit businesses to the area. It just shows that economies go in cycles.

"Everybody in the know says we've hit bottom and we're on our way up," she said. Hayes added that lots of companies are still making inquiries about moving to Sacramento, "largely in the clean and green space."

The Forbes rankings aren't exclusively about economic conditions. They also factor in tax rates, crime, municipal corruption, weather, traffic and – honest – the performance of the cities' pro sports teams.

It was no wonder that Sacramento, with 12.5 percent unemployment and an NBA franchise that's won 25 percent of its games, made the list.

A total of eight California cities made it, with Stockton holding the No. 1 spot.

"That misery index is a slap to the face," said Michael, whose campus is in Stockton. "We've been dealing with it in Stockton for years, and it's a contrived thing."

More serious are the numbers from the Bureau of Labor Statistics. It looked at the more than 18,000 jobs the region lost in 2010, filtered out the agriculture sector and determined that Sacramento's non-farm job loss was 17,700.

In absolute numbers, that was fifth-largest job loss in the country. In percentage terms, looking at the 36 largest metro areas, Sacramento's negative 2.2 percent job performance was the nation's worst.

Throw in a study on Internet job listings by the Conference Board, a private business organization, and the picture gets grimmer.

The board reported last week that there were 5.7 job seekers for every online opening in January. That was the third-highest ratio in the country, behind Riverside and Miami but ahead of Detroit.

The construction industry remains most troubled of all.

"It has been terrible the past two years," said Larry James, a Sacramento building contractor. "I've been out of work, just odd jobs here and there, and a lot of my buddies have been taking any little thing they could get."

James said the market seems to be improving.

"We're getting some work thrown our way," he said. "It's not impossible now."

But Michael said Sacramento is in for a rough 2011. In UOP's official quarterly forecast last month, he said Sacramento unemployment will average 12.8 percent this year, up three-tenths of a percentage point from its current level.

Read the full story at sacbee.com

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