Kern's Economy Softens

May 23, 2007
Kathy Miller, 661/654-2456, or
Michele Newel, 661/654-2720,

Kern County's economy slowed in the first quarter of 2007, affected by the hard winter freeze and declining oil prices, according to the latest issue of the Kern Economic Journal, published by California State University, Bakersfield.

The county's economy grew at an annual rate of 2.5 percent, down from the 3.6 percent rate recorded in the fourth quarter 2006.

Business's outlook for the county's economy also spiraled downward, said Abbas Grammy, professor of applied economics at CSUB, and publisher of the Kern Economic Journal. "Business optimism continued to erode in Kern County," Grammy said. "While business managers remained confident about local economic conditions, their degree of optimism declined form the previous quarter." The Business Outlook Index dropped to 117 from the previous quarter's 124 reading. Over the course of the year, the index has dropped 20 points from the 137 figured in the first quarter 2006. "The loss of business confidence is alarming since the index value has plunged 20 percentage points over the last four quarters," Grammy said.

While business seemed a bit bearish in its outlook, consumer confidence in Bakersfield remained solid. The Bakersfield Consumer Sentiment Index remained at 125, the same reading as the previous quarter. "The Bakersfield Consumer Sentiment is holding steady at a level that is exceeded just one-third of the time," said Mark Evans, associate dean of the School of Business and Public Administration and an economics professor at CSUB. "This seems reasonable since nothing is causing the local economy to diverge from national trends."

In keeping with the softer local economy, the county's jobless rate rose to 8.5 percent in the first quarter, up from 6.9 percent in the preceding quarter. Grammy said that was mostly due to the loss of 7,000 jobs due primarily to the winter freeze of the citrus crop. Even with the increase, the county's jobless rate remained below average, he said.

Bakersfield's jobless rate also rose a percentage point during the quarter, moving to 5.9 percent. Other county unemployment figures below the county average include Ridgecrest at 4.8 percent, Tehachapi at 5.7 percent, California City at 6.6 percent, and Taft at 8.3 percent. The traditional county pockets of high unemployment showed little fluctuation, with Arvin posting 23.8 percent unemployment, a more than 2 point rise; Delano 23.2 percent, up 4 percent; McFarland 18.5 percent, up 3.5 percent; and Lamont 15.7 percent, up 2.7 percent. Shafter and Wasco were at 15.5 percent and 16.2 percent respectively.

The latest issue of the Kern Economic Journal also includes a detailed article by CSUB economics professor David Berri on the impacts of a new NASCAR raceway currently under construction at the intersection of Interstate 5 and Highway 43. Berri concludes that the new track will have a significant positive impact on the county's economy.

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) 654-2466, or e-mail Grammy at You can also visit the journal's website at