Sacramento, a relatively small city by California standards, plays host to the nation’s largest state government bureaucracy. Employment by government, accordingly, accounts for a large share of the Metropolitan Statistical Area (MSA) total non-farm employment—27.1% as of July 2012, according to data provided by the U.S. Bureau of Labor Statistics (BLS). Thus, the entrenched state budget crisis and problems levied thereby against public sector employment, once a bulwark against cycles in the private economy, have had a disproportionately harsh impact.
While the “Friday furlough” system has kept state government employment numbers up, the effects on the economy of the related loss of household income have been significant. And, according to an August report in the Sacramento Bee, layoffs of state employees may accelerate. Meanwhile, employment by state government in the MSA as of August (preliminary data) was down 2,100 jobs (2.0%) from 12 months prior. (Interestingly, employment by government as a whole—federal, state, and local—was up over the same 12-month span, an effect almost entirely of gains in the Local Government Educational Services sector.) In addition, the waning of the marked corporate relocation and expansion trend enjoyed in the pre-recession period has added to the region’s economic stagnation.
For the MSA economy as a whole, the BLS reports non-farm employment as of August up 17,700 jobs (2.2%) from 12 months prior. The margin over 24 months was 9,200 jobs (1.1%). Contributing to the increase was the 4,900-job (4.8%) 12-month gain in the large and important Professional and Business Services sector. Growth also has returned to the long-beleaguered Construction segment. Employment therein as of August was up 3,300 jobs (8.4%) from August 2011. The recent gains in this sector, however, are but a drop in the bucket alongside its preceding losses. Employment in Construction remains only 55.6% of what it was in August 2005. Indeed, August 2012 non-farm employment overall remained down fully 92,100 jobs (10.2%) from five years earlier. At the current pace, the return to pre-recession employment levels will be a protracted affair.
As was typical for California, the housing market fell into a deep hole; a very lengthy climb back up is expected. Still, here too are some favorable recent indicators. “Home sales and prices continued their upward momentum [in August] as Sacramento was added to a national list of improving housing markets,” the Sacramento Business Journal reported in September. According to the National Association of Realtors, the $170,200 second-quarter median single-family home resale price in the local MSA was up 2.2% year-over-year and was up 3.8% for the quarter alone. “As prices increase, foreclosure sales are diminishing,” added the Business Journal. “[T]hey represented 16.6% of all sales in August compared with 37.5% a year ago—while the percentage of short sales and conventional transactions increase[s]. Traditional sales accounted for 48.5% of all transactions in Sacramento County and West Sacramento [in August], up from 38.5% a year previous.”