Economic Indicators

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Economic Outlook: City of Modesto  

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The City of Modesto continues to slowly recover from the “Great Recession”. Some economic indicators have shown improvement over the last few years and continue to show positive trends. These factors along with minor revenue growth show that the City of Modesto, and many of the surrounding areas in Stanislaus County, is moving beyond recovery into growth.

The recession brought an onslaught of decreases in everything from employment rates to job growth to housing starts. Many economists are recognizing the recovery and growth that is now starting; as the “Great Recession” is thought to be over. In the most recent California and Metro Forecast from the University of the Pacific, many of these key areas are projected to be increasing over the next few years across California. Single-family housing starts are projected to grow statewide from an estimated 43,000 in 2014 to 61,000 in 2015 and then to 86,000 in 2016. After years of such sharp decline, these small amounts of growth are welcome indicators that California is continuing its climb out of the recession.

Household Indicators

Median Houshold ncome
Average median earnings of households in the City of Modesto have risen over the last two fiscal years. The median household income went from $46,316 in FY 2009 to the lowest amount of $41,863 in FY 2011, but it has shown steady increases through FY 2013 to $46,329.
Consumer Price Index
West Region includes Alaska, Arizona, California, Colorado, Hawaii, Idaho, Montana, Nevada, New Mexico, Oregon, Utah, Washington, and Wyoming

The U.S. CPI increased from 233.6 in October 2013 to 237.4 in October 2014, while the San Francisco – Oakland – San Jose CPI increased from 246.6 to 254.5 over the same time period.
City Water Shutoffs
*2014 only contains shutoff figures through the month of October.
The number of monthly shutoffs in October 2014 was 820 which were down from 1,196 in October 2013.

Labor Indicators

Unemployment Rate
The unemployment rate in Modesto for September 2014 was 9.7, down from 11.3 a year before in September 2013. While this remains higher than the United States (5.9) and California (7.3) rates it is still a positive sign that the rate is slowly decreasing over time.
Labor Force
Increased labor force in August and September 2014 from the previous summer months has not led to an increase in the unemployment rate as the rate has actually decreased over the same time period.

Housing Indicators

Median Sales Price
Chart above shows data from 2015 RealtyTrac data. According to RealtyTrac, there were 792 properties in some stage of the foreclosure process in the City of Modesto. The number of properties that received a foreclosure filing for October 2014 was 18% lower than the same month the previous year.

Home sales were down by 6% in September 2014 when compared with the same month the previous year. The median sales price of a home was $208,500 with the median sales price of a foreclosure home being $166,000. This was 20.38% lower than a non-foreclosure home.

Construction Indicators

Single Family and Multi Family Permits
Single Family (SF) and Multi-Family (MF) permit activity continues to be somewhat dormant in the City of Modesto. While there has been some activity over the last fiscal year, it pales in comparison to the booming years from 2000 to 2005. In these years permits for SF would average 85 per month and MF would average over 7. Now those averages have fallen sharply to 2 permits per month for SF and barely 1 for MF over the past 5 years.
Commercial Permits
Commercial permit activity continues to be active, albeit at lower levels. The graph above shows the different types of permits that are issued within the commercial category. Remodel permits continue to be the most active category in the area.
Permit Activity by type
Since the “Great Recession” permit activity has been pretty consistent. Residential permits have ranged from 2,654 to 3,526 annually and commercial permits have ranged from 455 to 576 annually. The graph above shows that there is has been a slight increase in activity for residential permits over the last two fiscal years.

Revenue Indicators

Sales Tax and Tripple Flip
The City of Modesto’s Sales Tax figures continue to rebound after the recession. The graph above shows the slow but steady increase in overall Sales Tax revenues received. Modesto has seen the Sales Tax revenues receipted go from $29.6 million in 2006 down to $22.3 million in 2010 and back up to $27.6 million in 2014.
Property tax
The City’s Property Tax collections fell along with many of the revenues during the “Great Recession” from $28.38  in 2009 to $23.11 in 2013 but are on the rise again to $27.00 in 2015 as we continue to move into the second half of the decade.
Transient Occupancy Tax
Fiscal Year 2015 1st Quarter Transient Occupancy Tax (TOT) were $159,840 which is up from $86,519 in 1st Quarter of Fiscal Year 2014.