Monday, January 31, 2011

DeltaFusion, a unique cultural and theatrical event. Finale is July 23 in Stockton

I heard about the DeltaFusion project about a month ago, and am pleased to see they have received some modest support ($10,000) from the National Endowment of the Arts.  Congratulations to the University of the Pacific's Theatre Arts and Visual Arts program for this making this unique community, artistic, cultural, educational event happen. 
The National Endowment for the Arts (NEA) has recently awarded a grant of $10,000 to the University in support of DeltaFusion. The project, conceived by Theatre Arts Chair Cathie McClellan and Visual Arts Chair Brett DeBoer, will use visual and performing arts as a means to celebrate the cultural heritage of the city of Stockton and San Joaquin County, one of the most culturally diverse areas in the country.

DeltaFusion is taking place June 20 through July 23, 2011, and the final event will be a parade and performance on Saturday, July 23, the anniversary of the incorporation of Stockton as a city.

Professor McClellan conceived the idea for DeltaFusion after being inspired by Aquatopia—a summer program she participated in several years ago led by Pacific's Visual Arts department. Aquatopia combined art and science to raise awareness of the ecosystem of the California watershed....

"We are excited to be able to offer DeltaFusion as a way to show how the Arts can be used to encourage acceptance of diversity, enhance community, and invigorate public discussion of contemporary issues," said Dr. Joanna Albala, Director of Research Initiatives & Strategic Partnerships for the College of the Pacific...

DeltaFusion will be a 5-week session of workshops in which participants will develop a performance that centers on the history of the delta, the industries that took root here, and the immigrant populations who arrived to work in those industries. Participants will create and use large-scale puppets to tell the story...

DeltaFusion will include master puppeteers from the Minneapolis organization In the Heart of the Beast Puppet and Mask Theatre (HOBT) who will share their expertise and assist with making the giant puppets that will be the centerpiece of the performance. HOBT uses puppet and mask theatre to promote social and cultural awareness...

The DeltaFusion parade will begin at Pixie Woods and end at Victory Park. The performance will follow on the grounds of the Haggin Museum, which has been an active partner in the DeltaFusion project. Other partners include Rob and Ria Kroff from KUDOS Children's Theatre Company, the Stockton Arts Commission, and the Cultural Heritage Council of San Joaquin County.

Thursday, January 27, 2011

Do farmers really plant almonds because water is expensive?

Matt Jenkins' reporting on agriculture and water is generally good, but I have to quibble with his recent article that uncritically repeats the claim/theory that high water prices caused farmers to plant almonds.  He does note the paradox of scarce water causing one to plant permanent crops, so one wonders why Mr. Jenkins wasn't more skeptical of the argument.

Almonds plantings have increased rapidly following the price of almonds and expansion of demand for the crop.  Almond plantings started growing long before water became scarce, and almond plantings have also grown in areas where water prices have not increased.  In fact, I suspect if water was a factor, it might have been that west siders had thought their water supplies had gotten more secure a few years back.

If input prices/scarcity had something to do with the move towards almonds over cotton and vegetables in the past decade, I wouldn't be surprised if labor costs/scarcity were as important as water.  We also had low long-term interest rates that made capital investments like planting orchards more profitable.  I would also advance the theory that cows don't eat cotton, and the growth of the Valley's dairy industry and rising prices for animal feed may also have something to do with shifts out of cotton.  I don't have any studies to prove these, but they seem like more plausible stories behind crop shifts than expensive water.

My favorite quote in the article was the suggestion that banks were taking on big risks loaning to agriculture.
 "Listen, any banker who stays in this ag thing ought to have their head examined," Borba says, and laughs."
I'm glad Matt had a good quote from an actual banker "You can't take a brush and paint the whole San Joaquin Valley with one color,". I talk to Valley bankers enough to know that they all would like to make more ag loans as they are their best performing assets by far. 

To be fair, a lot of Mr. Jenkins' new article is very good, much better and more in depth than typical journalism on the topic.  The discussion of how tomato production shifted around is excellent, much better than 60 minutes playing ridiculous sound bites of Westland farm owners predicting that the price of pizza and spaghetti sauce was going to shoot up because of the Delta Smelt. 

I must also complement him for not repeating the still too common claims that the 2009 idled 500,000 acres, cost billions of dollars and tens of thousands of jobs.  It looks like he got these numbers from the Pacific/Davis report on our webpage (I talked to Matt back in 2009 about the then differing estimates, so it is good to see he has been following the numbers and using the most recent stuff). 
In 2009 ... farmers were forced to idle, or "fallow," about a quarter-million acres of cropland because of drought and pumping restrictions, which cost them somewhere around $350 million in losses.
P.S.  I have an issue with the title of the article too, "Where Westlands water flows, California’s agriculture follows".  It's just plain wrong, but I know enough about journalism to know that Mr. Jenkins didn't write the title. 

She's Not a Ghost, She's the Next American Idol

I was watching American Idol with the kids last night, and greatly enjoyed the performance of Thia Megia from Mountain House, CA.

Why is this mentioned on the Valley Economy blog?

Mountain House, California has the distinction of having the highest foreclosure rate (see Table 2 here) in  America's foreclosure capital, the Stockton MSA (San Joaquin County).  Mountain House is exactly the type of new build, exurban, high foreclosure community in the Valley that the media keeps calling ghost towns.  Seemingly every month, we deal with another sensational press story, or have to listen to another "expert" from Wall Street or Silicon Valley suggest we should write off these areas or even bulldoze them.

But Ghost Towns are empty places that reflect the past, the foreclosure towns of the Valley are still very much filled with people, especially young people like Thia, who represent the future of America.  I hope Thia goes far in American Idol (she does have the talent to do it!), and I hope she gets a hometown visit.  Perhaps then the media will see that places like Mountain House (and Lathrop, and Weston Ranch) aren't empty ghost towns, but are still places that are very much alive, especially with young students like Thia.  They are struggling places, but they are places that do have a future, and they are still the home of America's future.

I'm sure Thia just wants a chance to sing and fulfill her dreams, not be the face of the Valley's maligned foreclosure towns (I saw her facebook page identifies the Bay area as home, and I'm sure her Facebook page gets zillions more hits than the Valley Economy blog).  Unfortunately, these towns in the Valley have an image problem, and Thia could help turn that around.  Go Thia! 

C'mon Jerry, Voters are Grown-Ups

I am getting tired of Jerry Brown saying he didn't release a budget that doesn't assume voters approve extending the current taxes, because he didn't want to appear to be threatening voters.  I have read numerous quotes similar to this passage in today's Sacramento Bee.
Brown said the proposed reductions are only half as bad as will be required if voters do not extend tax increases. He invited Republican lawmakers resistant to such a measure to describe an "all-cuts" alternative, asking, "Is it really fair and honest to keep that secret?"

Brown, fearful of being seen as threatening to voters, won't release such a document himself.

"It's so horrible that we don't like to release it," he said.
Rather than an "all cuts" budget, I would call it a "current law" budget.  Current law is that the tax increases expire, and I think it is dishonest not to propose a budget under those circumstances.  I have a hard time calling his budget more honest than his predecessors (as some seem to be) when it is also based on a highly uncertain revenue assumption.

Would Brown's "current law" or "all cuts" budget really reflect what he would really do if the revenues don't materialize?  Or will it be crafted in such a way to create dramatic headline cuts in the most politically popular programs that will scare voters into supporting the tax increases.  If it is honestly reflects what he believes are the best choices and is prepared to do in the absence of revenues, then it isn't threatening anyone even if some people find it scary.   And why is he saying that it is Republicans burden to propose an "all cuts" budget.  If the tax increases are voted down, it will still be Democrats creating the budget by majority vote.  The relevant alternative for voters to consider is what Democrats would cut or protect in that instance.  If Democrats put together an honest "all cuts" budget, then I think Republicans should not stand in the way of putting tax increases to voters.

I would also like to see a smaller, alternative set of tax increases put before voters as a substitute for extending the current package.  I  don't particularly like the tax package that is expiring as it is regressive and further pushes up California's high marginal rates on a low tax base.  As an example, I would prefer to see us expanding the sales tax base (reducing the number of items exempted from sales tax, especially amusements like golf and movie tickets), and applying an oil severance tax.  All these exemptions have powerful lobbies, and are tough to get through the legislature, but I bet the public might support them if framed as an alternative to the current higher sales and income tax rates on everyone.

Picking Up the Pace

I'm getting some complaints about the slowing pace of posts. Finally have a bit of a lull, so I'll try to put up a few posts today before the next wave of work hits. I keep getting asked what I think of the Governor's budget as well as more requests for water posts so I will try to hit those topics.

I have been giving a lot of talks about the economy up and down the Valley these past few weeks (Sacramento, Stockton, and Fresno), so come on out and ask me questions in person.

We also released an updated forecast, click here to access the summary. It is marginally better than our October forecast, especially for 2011.

Friday, January 7, 2011

A Hint for the Mortgage Bankers Association: 95230 is Farmington, the name is a clue to your puzzling data on city neighborhoods

The Mortgage Bankers Association just released a report getting lots of press called "A Study of Real Estate Markets in Declining Cities."  Because Stockton is a featured case study in the report, I just wasted much of morning reviewing this junk.  It has many obvious problems on my initial pass through the report, but I will just point out this one that tickled my funny bone.

One point that the MBA report overly emphasizes is the disparity in the rates of depreciation within declining metro areas.  It makes this point by pulling out a few select zipcodes in the Stockton metro area (San Joaquin County) to show the disparities in values.  He only identifies the zipcodes by numbers, not names of the areas, but those of us who live and work here recognize the zipcodes include Tracy, northwest Stockton, and 95230.  I have to admit, I had to look up 95230 because I don't see that one too often.

The author is amazed at the difference between 95230, "where the value of the stock has increased by over 115 percent since 2000 and has only given back 10 percent since its peak in 2005" and uses this as evidence of widely varying outcomes within neighborhoods in the Stockton MSA.  In fact, I have noticed just the opposite, there is remarkably little variation in the percent depreciation by zipcode, and the variation that does exist is generally driven by the amount of new (built 2002-2007) construction in the zipcode sold at initially inflated prices.

In an ideal world, the author (Dr. Follian) would have taken a field trip to the area and visited a few of these zipcodes before selecting a small sample for analysis.  He would have learned that his featured zipcode does not include a single stoplight, although there is one 4-way stop pictured below. (Visiting bankers should be sure to click on the image and view the whole downtown Farmington panorama)

{Image deleted because it was messing up the loading of the blog. Go to Google Maps, type in Farmington, CA to see an image of downtown.]

The zipcode basically straddles Highway 4 from this stop sign in Farmington into the foothills before Copperopolis, beautiful country and one of my favorite drives in the area.  Dr. Follian would enjoy the drive, and would also learn that he should probably discard this zipcode from a study of real estate markets in "cities" for the MBA.  The zipcode covers a vast area and has a population below 1,000.

Despite the snarky comments, I don't really fault him for not coming here.  As an economic researcher I spend a lot of time analyzing data in areas I infrequently or never visit (particularly Los Angeles).  However, when one notices a large anomaly in the local data, there is usually a simple explanation to be found on Google Maps or in the old days just by picking up the phone.

If mortgage bankers want better analysis of the San Joaquin County real estate market, I recommend the Regional Analysts we published on the subject in May 2010 or December 2008.  Please don't stop lending here because of the flawed analysis in your Association's report.  Mortgage bankers have done enough damage to this area, and it seems to me that they don't understand the local housing market any better today than in 2003 to 2006 when their risky loans fueled the Stockton bubble.

Thursday, January 6, 2011

House Natural Resources Committee New Webpage

A blog reader emailed me this link to the brand new House of Representatives Natural Resources Committee webpage.  This bullet was under "Get the Facts."
The lack of water has caused 500,000 acres of farm land to dry up – a land mass equivalent to the size of the State of Rhode Island. Also, according to a May 2009 report by U.C. Davis, the water restrictions have left nearly 40,000 people unemployed.
If it were an old webpage, I would be more forgiving, but since it is a new webpage it ought to have the most recent information.

The updated estimates in this joint Pacific/Davis September 2010 report are that the pumping restrictions generated a loss of 60,000 to 130,000 acres, and between 1,392 and 2,973 jobs.

Don't be surprised if/when new studies by reputable researchers (not by me or the Davis folks) addressing this question with more rigorous, econometric models find that even these updated employment loss estimates are too high.  That shouldn't be surprising to economists familiar with the differences between input-output and econometric models.