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Kern economic report
 
March 10, 2005
CONTACT: Mike Stepanovich, 661/664-2456 or mstepanovich@csub.edu
or jloveless@csub.edu.

Kern County’s economy showed signs of improvement in the fourth quarter of 2004, with an increase in the level of consumer sentiment despite a slight dip in the business outlook index, according to the latest issue of the Kern Economic Journal, published by California State University, Bakersfield.

What researchers found encouraging was that the economy expanded at an annual rate of 2.4 percent, and labor productivity increased. Additionally, while the county’s unemployment rate increased to 11.4 percent, non-farm employment increased at an annual rate of 1.3 percent.

A concern was the decline in housing affordability. The median housing price appreciated by 3.5 percent in the fourth quarter. The county’s affordability index remained unchanged at 39 percent. This means that a family earning the median household income has 39 percent of the income necessary to qualify for a conventional loan covering 80 percent of a median priced existing single-family home.

The Business Outlook Index declined slightly from 136.8 in the third quarter to 126.4 in the fourth quarter. “These numbers indicate that business managers remain optimistic about local business conditions,” said Abbas Grammy, CSUB economics professor and publisher of the journal. “But their degree of optimism has slightly declined. However, the BOI (Business Outlook Index) was 10 percentage points higher than four quarters ago.

The Bakersfield Consumer Sentiment Index reached a value of 144 in the fourth quarter. This is the highest level since CSUB began compiling the index in 1999, considerably higher than the 115 reading in the third quarter. “Pessimism is nearly nonexistent,” said Mark Evans, interim dean of CSUB’s Extended University and an economics professor. “For every question on the survey, the frequency of pessimistic responses was less than 10 percent.”

Several factors that brightened the local business outlook: greater local spending for the November elections, the holiday season helping with retail sales, and growth in local construction and service industries. Evans added consumers expressed concern over rising fuel costs, the winter season lowering agricultural activity, and the high cost of the war in Iraq.

Other trends reported in the Journal that reflect Kern’s economy:

  • Personal income and labor productivity in the county continue to rise, Grammy reported.
  • The median sales price of all homes in Kern County soared another $6,500 in the fourth quarter to $186,800. Since the fourth quarter of last year, the county’s median price has appreciated $49,380 or 36 percent.
  • Crude oil prices continue to rise. The average price of San Joaquin Valley heavy crude, the area’s benchmark oil, climbed 26 cents per barrel in the fourth quarter to $35.35. Compared with four quarters ago, the average price is up $10.37 per barrel.

The latest issue of the Kern Economic Journal also includes a detailed look at the California wine industry and a look at the status of the purported price bubble in the local real estate market.

The Kern Economic Journal is a quarterly publication focusing on local economic trends and developments. The journal provides the community with economic information produced by the CSUB Economics Department. "What we provide is local economic news," Grammy said. "This helps local business people make better decisions. We study local economic trends to determine how the local economy is progressing."

A subscription to the Kern Economic Journal costs $60 per year for the print issue, $80 for the electronic issue, including archives; and $100 per year for both hard copy and online, including access to the archives. For a free initial copy or more information about any of the studies published in the journal, please call (661) 664-2466, or e-mail Grammy at agrammy@csub.edu. You can also visit the journal's website at www.csub.edu/kej.

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