Fresno fares a bit better in recession

Published online on Tuesday, Oct. 06, 2009

WASHINGTON -- San Joaquin Valley cities remain mired in the great economic meltdown, though a new study shows how some are suffering more than others.

High unemployment, devastated housing prices and rampant foreclosures still keep Modesto ranked near the bottom among 100 metropolitan regions evaluated by Brookings Institution experts. Fresno fares slightly better, though it's not exactly soaring.

"Things are still bad, but they aren't as bad as they were at the beginning of the year," study author Alan Berube stated, adding that conditions "have moderated in most metropolitan areas ... but there is still a great deal of variation."

For Valley residents long accustomed to uniformly grim economic report cards, the latest assessment from Brookings' Metropolitan Policy Program offers a somewhat nuanced message: The Valley's pain is deep but not distributed equally.

Fresno, in particular, has been having relatively fewer home foreclosures of late. Consequently, while Fresno has joined the likes of Sacramento and San Jose among the 20 cities listed in the tier of "second weakest" metropolitan areas, Modesto and Stockton still count among the nation's "weakest" areas, as defined by the Brookings study.

Most tellingly, a 20.6% decline in housing prices since last year ranked Modesto second-to-worst out of 100 cities studied nationwide. Fresno ranked 92nd, with a 16.6% housing price decline.

"Our assessment has [also] been that Fresno has fared somewhat better than its northern San Joaquin Valley neighbors," said Jeffrey Michael, director of the Business Forecasting Center at the University of the Pacific's Eberhardt School of Business. "The first year of the recession hit harder in Modesto and Stockton, and the recession was later arriving in Fresno."

Michael's own latest forecast predicts that the Valley's recovery will lag behind the rest of California. He estimated unemployment will peak in the first half of next year at 17.9% in Modesto and 17% in Fresno before starting to subside.

The subtle contrasts among cities along the Highway 99 corridor are much smaller than those between the region as a whole and other, more economically dynamic areas.

For instance, Omaha's unemployment rate of 5.4% in June increased over the past year, but only by 1.7 percentage points. This ranked Nebraska's largest city at or near the top among areas evaluated by Brookings' economists.

Modesto's unemployment rate in June, by contrast, was 16.5%. This was second worst in the nation among all metropolitan areas, trailing only Detroit. Always high, Modesto's unemployment rate had increased 5.8 points over the prior year.

Of the bottom five metropolitan areas nationwide with the highest June unemployment rate, four -- Modesto, Stockton, Fresno and Bakersfield -- are in the San Joaquin Valley.

Fresno's unemployment rate of 15.3% in June marked a 5.7-point increase over the prior year.