Thursday, April 30, 2009

Stockton has best air quality in San Joaquin Valley

If you focus on the grade from the American Lung Association, you will see that the entire Valley received an F, and there is certainly lots of room for improvement in San Joaquin County air pollution.

However, if you look at the underlying data at the Lung Association, you see that San Joaquin County has by far the best air quality in the Valley. Stockton scores better than my old home in Maryland, wheras Fresno and Bakersfield are much worse.

Stockton has some costs imposed on it because it is lumped in with the rest of the Valley for air pollution regulation. It would be beneficial for the northern San Joaquin Valley if the boundaries for air quality regulation were split up.

Friday, April 24, 2009

Peripheral Canal and Drought

This story describes a new study that says a peripheral canal will not be able to supply more water in dry years - like the current one - and still meet environmental flow and water quality needs in the Delta.

This is very important in evaluating whether the PC is a good investment.

Thursday, April 23, 2009

Decreasing Rents

Rents are slowly dropping in Stockton. The Sac Bee had a similar story for their area.

Most of the focus has been on home prices, but it is just as important to note that from 2000 to 2007, rents in San Joaquin County increased 46%, while household income increased 27%. I think this trend of gradually decreasing to flat rents will continue for another two years, and average asking rent will likely decrease another $30-50 per month to the low $800s.

And with all due respect to Terry Hull (whom I like and think is pretty knowledgable about the market), basic economics doesn't describe "too much" demand or "too much" supply.
"It's too much supply and too little demand - just classic economics," said
Terry Hull, whose Stockton-based family business Property Management Experts
manages apartment complexes, duplexes, triplexes and rental homes from Elk Grove to Fresno.

Supply has increased and prices (rents) have decreased. This is good for buyers (renters), and bad for sellers like Terry. Through the boom, rent increases were also outpacing income growth, and rental property investors have had a good run. They are also picking up new property now at very attractive pricing.

I also think it is good for the overall Valley economy, as cash that isn't spent for rent will be spent or saved in other ways, and reducing housing costs is important to attracting new business investment (and new jobs) to the region.

Wednesday, April 22, 2009

Home Builders Push for Lower Fees

Home Builers Push for Lower Fees

This is a very reasonable request by the home builders.

It actually makes more sense than the $10,000 tax credit to which they are comparing it.

Thursday, April 16, 2009

Farm Job Mystery Solved

In previous posts, I have pointed out how farm payrolls are increasing despite the claims of water exporters who want to relax Delta environmental protections.

From the New York Times on the March for Water.

Many of the protesters were paid by their employers to march in lieu of harvesting crops. In reality, this is not a farm worker march,” said Arturo Rodriguez, president of the United Farm Workers of America, the 27,000-member union founded by César Chávez, which did not participate in the march. “This is a farmer march orchestrated and financed by growers.”

Tuesday, April 14, 2009

Unemployment and Crime

When I talk to people around the Valley about the economy, a common prediction/concern from the audience is a spike in crime. There are certainly plenty of links between crime and unemployment, so this is a reasonable expectation.

In a bit of good news, so far I haven't seen evidence of a crime wave in the area. Sacramento just set a record for consecutive days without a homicide (sorry I don't have a link), and crime is actually down in Stockton (though with a tragedy of Sandra Cantu, last month's courthouse judge attack, and the proposed citizen militia, media coverage of crime in San Joaquin county is up.) From the Stockton police chief in today's Record:

Ulring said crime overall in Stockton in the first three months of 2009 was down significantly from the first three months of 2008.
Violent crime was down 10.9 percent, and property crime was down 21.4 percent, he said. Auto theft was down 26.9 percent, he said.

Sunday, April 12, 2009

San Francisco Chronicle Peripheral Canal Articles

Today, the San Francisco Chronicle published pro/con peripheral canal articles. The PPIC/UC-Davis team of Ellen Hanak and Jay Lund argued pro, and George Miller and Lois Wok against.

Anyone who reads this blog knows that I don't think much of the PPICs much-touted study. Click the peripheral canal link on this blog for comments or here to see my detailed review of their work. Hanak/Lund should be fixing their deeply flawed study instead of writing editorials.

I think the Miller/Wolk piece is very good. This part was particularly interesting to me.
Yet the state Department of Water Resources is now spending more than $1.1 billion on canal and water project planning - off budget, with no legislative oversight or public accountability

You would think that $1billion of planning and engineering studies would include at least one cost-benefit study of this massive public spending program. Nope. I guess they don't want to know the answer. Miller/Wolk propose adding Delta as a place as a 3rd priority to the co-equal goals of reliable water supplies and the environment. I would add a 4th stakeholder, the state's taxpayer, who is being asked to be the banker.

Thursday, April 9, 2009

Does Timothy Quinn think lower water exports caused the recession?

I saw a reference in a media report that Timothy Quinn, director of the Association of California Water Contractors (ACWA), said "there have been 2.6 million jobs lost in California due to the current water crisis."

There have been many exagerrations made by peripheral canal advocates through the debate, but this would be the ultimate whopper if he really said it. I've been misquoted enough in the press that I do give people the benefit of the doubt, so I found the Powerpoint of his presentation here to check.

Quinn's 2.6 million number is the lost U.S. jobs in 2008 in all sectors, so it doesn't look like he technically said anything untrue. However, this statistic is completely unrelated to the water crisis and is presented in a way to easily confuse audiences (note all the pictures of water impacts all around it and the headline on the slide). It clearly confused that reporter, and probably others in the audience. [Reminds me of how President Bush never actually said Iraq and 9/11 were connected, but by continuously referring to them in the same sentence and paragraph, people thought thought it was true.]

Quinn's presentation also includes 2 shots of the Sacramento Bee story with the exagerrated unemployment approaching 40% statistic I discussed here. Finally, it gives the 90,000 lost farm jobs statewide from the drought prediction. The current data has yet to show any farm job losses. As I have discussed many times on this blog, I believe we will eventually see lost farm jobs as the year progresses, but we haven't seen it yet and water exporters have been reporting predictions as current fact.

ACWA (the group Quinn directs) regularly visits this blog, and will surely read this post. Perhaps they could answer these questions in the comments. What the point of a slide showing 2.6 million lost jobs nationwide in 2008 (surrounded by pictures of water uses) in a presentation about the consequences of the water crisis. If you are going to post current employment numbers, why not post something relevant, like the real current payroll data on farm employment?

Perhaps, they don't think it would help their claims if people knew that farming has been the fastest growing employment sector in California over the past year. Here is the latest data.

Monday, April 6, 2009

Next10 Budget Challenge

Just took the California Budget Challenge from Next10. These kind of exercises are interesting, although the results can be guided by the way choices are presented and ordered. For example, I bet tax increases get more support at the end of the quiz than if you put them at the beginning.

Sunday, April 5, 2009

Decreasing Gasoline Demand

This graphic is from Saturday's Sacramento Bee.

This is a great example for an Economics professor to use to explain the difference between a change in demand vs. a change in quantity demanded. The decline in consumption in 06 and 07 and first part of 08 are relatively small, and a response to higher prices. That is a change in "quantity demanded," moving along the demand curve as price changes.

In late 2008, we see a big decrease in demand due to less income/economic activity. This is a change in Demand, the relationship between quantity demanded and price. As all Econ 101 students know, a decrease in demand will cause both price and quanitity to fall.

Thursday, April 2, 2009

Latest Forecast Released

See the press release for more details.

The headline number is the unemployment rate which we forecast will peak at 12.1% statewide. Underlying that estimate is our belief that the labor force will stop growing as discouraged folks leave the workforce, go back to school, etc. That's typical in recessions, but we haven't seen it yet in the data. There hasn't been much typical in this recession, so if labor force growth stays up, unemployment rates could hit 13%+ even if employment losses are as we project.

For the record, back in early December we projected the peak in the high 9% range, and UCLA was predicting an unemployment peak in the high 8% range. Obviously, we were both very wrong.

This time, our projections are very close. They are at 11.9% and we are 12.1%. Not too much difference. We are projecting a slightly faster recover, but overall the view isn't much different. A much more pessimistic forecast is out of UCSB. The forecast group at UC Santa Barbara is projecting 14.7%!