An economic forecast tailored for the Central Valley called out Kern’s “decelerating” job growth Tuesday, saying a decline in global oil prices is likely to blame for weak conditions here as compared with other counties in the region.
Wells Fargo economist Mark Vitner said in a teleconference that employment in Kern was up by only half a percent in July from a year before. That was significantly lower than the gains posted by Stockton (3.5 percent), Fresno County (3 percent), Hanford (2 percent) and Modesto (1 percent). Among the cities studied, it was better only than Madera’s negative 0.75 percent job growth.
“Bakersfield has actually seen growth decelerate, lose momentum, over the last year,” said Vitner, managing director and senior economist at Wells Fargo Securities. He noted that Kern’s economy is still growing, albeit at a slower pace than a year ago.
The forecast was just the latest indication that Kern has fallen from its position as one of California’s fastest-growing economies at the end of the recent recession. Although the county’s dependence on oil and agriculture provided an enviable boost when commodity prices were strong, the sharp decline in barrel prices since June 2014 has resulted in more than 1,200 local, petroleum-related layoffs, or about 10 percent of the industry’s direct employment in Kern.
Nationally, crude prices were at a six-year low last week, and in Kern County a barrel of Midway Sunset was selling at just $39.15.
In a wide-ranging presentation that also examined global and national economic conditions, Vitner pointed out that the pace of Bakersfield housing appreciation recently dipped below the national average, even as new home construction “has shown some tentative signs of improvement” with single-family housing construction permits on the rise.
The sectors adding the most local jobs lately, he said, are government and the employment category defined as trade, transportation and utilities. Professional and business services recently contracted as a source of jobs, as did construction, he noted, while leisure and hospitality posted significant employment gains.
Vitner’s outlook for the oil industry was not positive. Despite depressed global demand for petroleum, oil companies in the United States and elsewhere are increasing production, in many cases because they need to repay loans taken out when prices were higher.
He said the industry doesn’t appear to be past the worst of it.
“I don’t think that we have seen the bottom (of the slide in oil prices) yet,” he said.
What’s worse, California consumers have not benefited much from the lower oil prices, he said, because of refining problems.
“We’re probably not going to get the full benefit here,” he said.