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published on January 31, 2017 - 7:31 AM
Written by The Business Journal Staff
The Trump presidency is expected to have a greater impact on the economy of California — especially inland — in the next few years, according to the latest California & Metro Forecast from the Center for Business and Policy Research at University of the Pacific.

 

According to the forecast, Real Gross State Product is forecast to grow 2.6 percent his year, followed by a gradual decline in growth rates to 2 percent in 2020.

“The prospect of lower immigration and the risk of a trade war could further depress growth beyond 2017, particularly in California.”

The forecast was completed prior to the inauguration, and the forecasters believe it does not “fully capture an elevated risk of recession.”

“After the first full week of the Trump administration, our concern of recession spurred by global conflict and disruption of the movement of goods and people has increased,” according to the forecast.

The forecast does assume about 2/3 of the health care expansion funded by Obamacare will be rolled back starting in 2018, with health care job growth falling to below 1 percent after growing in excess of 3 percent annually over the past five years.

Inland regions would be most exposed to negative effects of the rollback through larger reliance on government spending, most notably health care, according to the forecast.

In Fresno, more than half of income growth from 2013-15 was attributed to expanded spending on health care and government, compared to San Jose at 15.7 percent.

In most of the Central Valley, the rate was more than 40 percent to past 50 percent.

Forecasters believe the ag sector is currently seeing price declines leading to revenue declines, coupled with rapidly rising costs, especially for labor. A stronger dollar also discourages exports.

Fresno’s unemployment rate this year is forecast at 9.5 percent, but is expected to increase to an estimated 10.6 percent in 2020.

Fresno is expecting a boost from high-speed rail spending near $1 billion this year. The result is 2 percent job growth, but that will slow to 0.5 percent growth in 2020, the slowest of any metro area, according to the forecast.

Leading sectors for employment growth this year in Fresno are construction and mining and leisure and hospitality.

Decreases this year are expected in information, manufacturing, federal government and financial activities.


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