Hey everybody this is a guest post from my friend Devin Lavelle. Devin’s got a master’s in public policy from CSUS, same program I’m in now, and needs a little space to wonk out now and then. Happy to oblige. Honestly, I didn’t know we were technically in a “depression” here in Sacto. I thought we were just a little sad…
Hello and welcome. My name is Devin Lavelle. You may remember me from such blogs as devinlavelle.com. Unfortunately, I did not have time to keep my own site fresh with worthwhile content, so it has fallen by the wayside. On the bright side, my friend, Cosmo Garvin, has offered me the opportunity to write from time to time in this space, so here I am. As I did on my own site, I plan to focus on analytical work. Simply put: what do the numbers say and, for better or for worse, what do they mean?
Unfortunately, the numbers I want to talk about today fall very firmly in the ‘for worse’ camp. As we all know, Sacramento has been slower than the state and the nation to emerge from the recession. Our unemployment stands at 10.3%, ranked 327th out of our nation’s 372 metropolitan areas.
The reality is that while our nation suffered through and is slowly emerging from the Great Recession, Sacramento has been mired in a full-on depression.
Ok, so you are probably asking, what is the difference between a depression and a recession? A depression is generally defined as either a recession lasting two or more years or a decline in Real Gross Domestic Product exceeding 10%.
On both counts, Sacramento meets the definition of a depression. Real Per Capita Gross Domestic Product (hereafter GDP) shrunk every year from 2007 through 2010. In 2006, the Sacramento metropolitan area was producing $43,947 per capita (2005 dollars) in total output. By 2010 that figure was down to $38,697. The Bureau of Economic Analysis regional figures for 2011 are not available yet, but if trends continue it appears likely that, due to the continued losses in the public sector, 2011 may have seen a net loss in GDP as well, despite a slowly rebounding private sector. GDP has declined for at least four and quite likely five consecutive years – at least twice as long as the minimum period to qualify as a depression.
The GDP decline from 2006 to 2010 totaled $5,250. This represents an 11.9% decline from the region’s high in 2006. Again, the decline clears the minimum definition with ample room to spare. As the following graph shows, Sacramento began experiencing negative economic growth about a year before California and the United States as a whole did and has experienced a slower recovery.
Particularly disheartening is that, as of the most recent available (2010) data, Sacramento’s economy fares worse than even Stockton by these measures. Stockton, though, started with a much weaker economy and negative trends there have not improved, so this may change when future data comes online.
Suffice it to say, we could be doing things a lot better here in the Sacramento region. It is worth pointing out that, while the City of Sacramento is often considered unfriendly to business, most of the region’s population and economic activity lies in other parts of the metropolitan area and, despite the pro-growth reputations of cities like West Sacramento and Roseville, the region as a whole has still slumped terribly.
If I can assume that I have depressed everyone amply for one article, let me at least leave you with this hopeful glimmer. I do have what I believe would be an extremely helpful and cost effective partial solution … and I will lay it out in my next article.