Tuesday, September 7, 2010

San Joaquin Valley Private Building Permits Declined $6.4 Billion over 4 years

Since this weeks economic proposal is to add another $50 billion to U.S. infrastructure spending, here is some perspective using numbers on the private building hole in the San Joaquin Valley (8 counties from Bakersfield/Kern to Stockton/San Joaquin).

Total private building permits issued in 2005 equaled $8.75 billion.  For 2009, the total was $2.3 billion and 2010 in on pace to be the same as 2009.  That's a $6.45 billion decline.  Even if you consider 2005 was a bubble year, $6 billion per year is a very sustainable level in the Valley (about 30% below 2009).

If the San Joaquin Valley received a population weighted share of the $50 billion Obama is proposing (we are a little more than 1% of U.S. pop.), our piece would be about $600 million. 

As someone who spends a lot of time on 99, it isn't hard to envision worthwhile places to spend highway money in the Valley, so this could be a good investment if well managed.  It will reduce some construction unemployment in the area, and put some idle resources to work creating things of lasting value.  However, your expectations for it working economic miracles should be tempered by the fact that it is only $600 million into the $6 billion annual hole in our construction economy ($4 billion if you want to think more in terms of returning to a non-bubble level.).

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