Economy

Where's recession really bad? California's San Joaquin Valley

WASHINGTON -- The great recession has slammed Stockton, Fresno and Modesto, Calif., harder than almost any other metropolitan areas in the country, according to the latest grim accounting.

The three San Joaquin Valley cities rank among the bottom 10 "weakest performing" metro regions nationwide, a Brookings Institution study released Wednesday concludes. Plunging house prices, soaring unemployment and viral foreclosures are all choking the region more than other parts of the country.

"All metropolitan areas are feeling the effects of this recession, but the distress is not shared equally," report co-author Alan Berube noted.

In March, for instance, Modesto's unemployment rate reached 17.5 percent and Fresno's hit 17 percent, while in the high-tech haven of Provo, Utah, it hovered at 5.1 percent. Stockton house prices fell 30.6 percent since January 2008. In Houston, they have rebounded by 4.7 percent.

Stockton, Modesto and Fresno ranked 93rd, 94th and 95th respectively in the rankings compiled by Brookings' Metropolitan Policy Program. Low city on the totem pole was Detroit, savaged by the loss of manufacturing jobs.

The Valley cities are long accustomed to poor showings in similar economic scorecards, and the general picture has been painted many times before. Berube cautioned, though, that the latest economic downturn further impedes perennial turnaround hopes.

"While some areas of the country ... may be emerging from the recession already, people living in metro areas that are now performing weakest economically should prepare themselves for a long recovery period," Berube stated.

The region's lawmakers are responding both symbolically and legislatively to the crisis that's summed up in the new 21-page Brookings report. They are all acutely ware of the political dangers posed by sustained voter frustration.

On Friday, for instance, the House Financial Services Committee will be holding a hearing on the Valley's dire economic circumstances. Lawmakers will consider, though not vote on, proposals including one by Reps. Dennis Cardoza, D-Merced, and Jim Costa, D-Fresno, that would establish the Valley as an "economic disaster" area eligible for special federal aid.

"We are one step closer to seeing the relief we deserve in the Valley," Cardoza declared in announcing the upcoming hearing.

In a slightly different rhetorical vein, Rep. Devin Nunes, R-Visalia, says he will be bringing more congressional attention to the irrigation water shortages that have aggravated the Valley's farm economy. Starting this week, Nunes plans to offer water-related amendments on House spending bills; he conceded the amendments will lose, but he believes they will still serve a purpose.

"We need to draw a clear congressional record of those people who want to cut off water to the Valley," Nunes said, adding his belief that congressional Democratic leaders "want the Valley killed."

While not addressing the Valley's specific water woes, nor the proposals for an "economic disaster" designation, Berube stressed that the region-to-region disparity will complicate the job of "policymakers seeking to ensure a truly national rising economic tide."

The study, which will be updated every quarter, focuses on the nation's largest metropolitan areas. Collectively, these areas account for two-thirds of the nation's jobs and generate three-quarters of the U.S. gross domestic product.

Some of the study's economic indicators are well known, like the unemployment rate. In Stockton, Fresno and Modesto, analysts noted the unemployment rates jumped more than 5.9 percent

Other economic indicators are more arcane, though no less depressing. The study, for instance, examines the percentage of mortgaged properties that have been foreclosed upon but didn't sell at auction and so are owned by the lending institution.

In Honolulu, for instance, fewer than 1 in 1,000 "mortgage-able" properties are now owned by the lenders. In Stockton, more than 14 homes in 1,000 are owned by the lenders, and in Modesto more than 13 homes in 1,000 are owned by lenders. The so-called "real-estate owned" proportion in Fresno is about 6.5 homes per 1,000.

The full report is available at:

http://www.brookings.edu/metro/(TILDE)/media/Files/rc/reports/2009/06_metro_monitor/06_metro_monitor.pdf

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