Economist: Kern County's growth remains steady
This story appeared in the Antelope Valley Press on Wednesday, March
31, 2004.
By ANN WISHART
Valley Press Business Editor
--------------------------------------------------------------------------------
BAKERSFIELD - Growth in Kern County, while not as rapid or overwhelming
as expansion in its neighbor, Los Angeles County, should be strong enough
for it to keep its place as the second largest economy in the San Joaquin
Valley.
Abbas P. Grammy, Ph.D., professor of economics at California State
University, Bakersfield, told the Kern County Economic Summit on Tuesday
the county will see its economy grow to more than $15 billion by 2005.
The county's growth rate is more than 2.1% a year, Grammy said, and the population, which is expected to increase from 703,400 in 2003 to 717,500 in 2004, is projected to grow at 2% a year to reach 1 million by 2020.
This combination of demographic changes likely will create a slow rise in per capita income, Grammy said in his presentation, to be published in his Kern Economic Journal this spring.
"Personal income per capita inclined from $20,540 in 2000 to $20,710 in 2003 and is expected to rise to $20,750 in 2005," Grammy reported.
Included in that projection is income in the county will continue to be derived from agriculture, oil, manufacturing and construction industries, he noted.
"Kern's economy is strong in the provision of services," Grammy said, with the largest service-providing sectors being government, trade, transportation, utilities and professional and business services.
Almost 17% of families living in Kern County have income that places them below the poverty line - a lower percentage than Tulare, Fresno and Merced Counties, according to Grammy's report.
Job creation to accommodate the county's expanding labor force seems to be shrinking in the public sector, but Grammy said private sector industries will take on more of the burden of employing the population.
The most alarming data in the State of the Economy report showed Kern County with a double-digit unemployment rate due to the area's having a large agriculture industry.
"A resource-based economy such as Kern County is expected to have high unemployment," Grammy wrote. Farm employment is seasonal and mechanization lowers the need for workers, so "we have an outflow of displaced workers from agriculture and an inflow of seasonal workers into agriculture."
Combining farm and nonfarm unemployment, rates have been as high as 15.7% in 1992 and as low as 10.7% in 2001, Grammy said. Nonfarm unemployment ranges from 6.3% in 2000 to 7.8% in 2003, between 1% and 2% greater than the state rate. Grammy's formula shows the rate to be 10.7% in 2001, 11.7% in 2002 and 12.3% in 2003. He predicts the rate will come down to 12.3% this year and 11.8% in 2005.
The highly affordable housing market is a bright spot in Kern County's economic picture, but homes prices have been rising as supply diminishes.
"The median sales price of all homes … climbed by a whopping $50,100 in four years," Grammy said. "It soared from $81,700 in 2000 to $130,800 in 2003. If this trend continues, the median sales price will rise to $145,500 in 2004 and $155,900 in 2005."
Adding to the cost of new homes is the trend toward larger ones. The median size of a home was 1,600 square feet in 2003 and is expected to rise to 1,700 square feet this year and 1,800 in 2005.
The cost of construction was $78 per square foot in 2003 and is rising about 10% a year.
awishart@avpress.com
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