Sacramento Economy, Research Paper Example

Inflation and Unemployment in Sacramento, California

The Sacramento region is a region of six counties: El Dorado, Placer, Sutter, Yolo, Yuba and Sacramento itself or two MSA’s Sacramento and Yuba City. The Sacramento MSA is actually called the Sacramento – Arden-Arcade – Roseville, California MSA. The main economic indexes of the region are represented through the macroeconomic indexes, total population, and employment/unemployment populations. It is important to figure the tendencies for development amid the governmental aid programs for economic recovery after the financial crisis. It is important to identify the local as well as national economic indicators in order to figure the needed conditions and spheres of production to recover Sacramento and make it a productable and efficient Californian region. One of the most important economic indicators which we will analyze is the unemployment level in the region and the countries inflation rate. California happened to cut the level of unemployment in the state, but unemployment in Sacramento heppened to raise even futher. The countries inflation rate was expected to reach the 1.7 percent to 2 percent level by the Federal Bank Reserve, but it reached a 9-month low of 1.4 percent. These tendencies not only affect the everyday cunsumpltion of a Sacramento citizen, but these indicators can result in a long-term weekened economy in the region.

From 2007 the annual unemployment rate of 5.5 percent the unemployment rate in Sacramento County raised to 7.2 percent in 2008, meanwhile the forcast for 2009 was even higher, at 7.7 percent (Sacramento Forcast Project, 2009). What is peculiar is that the Labor Force in the Sacramento County is continuously increaseing while the number of employed persons is continuously decreasing starting from 2007. The decline from 2007 to 2008 was an average of 0.16 percent rate, which is around 1 040 persons, while the decline from 2008 to 2009 is a 0.24 percent rate, around 1 600 persons. Thus, it is important to remark that in the Sacramento – Arden-Arcade – Roseville MSA the population grew from 1,808,693 in 2000 to 2,119,039 in 2008. That was a 17.16 percent change; in addition by 2020 there is a projected 36.55 percent change to a total of 2,469,717 persons. Among the local indicators that are affecting the economy are the taxable sales, number of building permits, housing prices, and the previous continuous per capita personal income. In all outlets in 2007 the taxable sales were posted with a 2.72 percent decrease, the decrease began with the US economic recession in 2005. In 2009 the decrease was relatively better in the Sacramento County; it reached a 2.5 percent decrease. The number of building permits in the Sacramento County had been dropping from the 2003 high of 13 960 permits up to the 2009 low of a total of 1 435 permits. Meanwhile in the Sacramento – Arden-Arcade – Roseville MSA the per capita personal income changed from $29,986 in 2000 to $37,078 in 2006, while the average US per capita personal income was $38,564 in 2006 (Proximity, 2010). Thus, due to the credit-crunch, which caused the financial crisis, the housing price index dropped from 267.88 in 2007 to 220.52 in the second quarter of 2008 in the MSA.

Regarding to the inflation indicator that the US economy is viewing today, which is 1.4 percent to the predicted 2 percent level, Sacramento is especially in a tense position (MarksJarvis, 2010). The country is worried because it could suffer a deflation, as a consequence to the crisis the country lived through. Analysts and economists claim that a short-term deflation is not so bad for the economy; however a possible long-term deflationary spiral is the thing to be afraid of. In such a condition the population will be less reluctant to purchases; they will wait for the prices to drop on goods and services. A low reluctance will result to businesses struggling to survive with low profits. The consequence will be a reaction by lowering wages and cutting workers for the increase of savings. This condition will worsen the situation especially for Sacramento forcing the county into a recession and poverty from continuously rising unemployment.

Works Cited

MarksJarvis G., 2010. “Market fears flip from inflation to deflation” Chicago Tribune. Retrieved August 8, 2010 from http://www.sacbee.com/2010/08/04/2938218/market-fears-flip-from-inflation.html/

Wasserman J., 2010. “Unemployment rate falls in California, but rises in Sacramento” The Sacramento Bee. Retrieved August 8, 2010 form http://www.istockanalyst.com/article/viewiStockNews/articleid/4315988/

Proximity, 2010. “Sacramento–Arden-Arcade–Roseville, CA MSA” Retrieved August 8, 2010 from http://proximityone.com/situation/40900.htm/

Jensen A.N., 2009. “Sacramento County Economic Forecast” Sacramento Forcast Project. Retrieved August 8, 2010 from http://www.csus.edu/indiv/j/jensena/sfp/sa11/sac5/sac/sacramen.htm/