Business Forecast: Valley is in an economic recession

Rising interest rates are having a disproportionate impact on the San Joaquin Valley economy, according to Foster Farms’ latest Valley Business Forecast report by Gokce Soydemir, a professor of business economics at Stanislaus State University. there is

“We have said in previous reports that the severity of a recession will depend on how quickly and how high the Federal Reserve raises interest rates. , raising concerns that the Federal Reserve is raising rates too quickly without waiting to see the impact on the economy.

He said several inversions in the 2-year and 10-year bond yield curves since late March portend a recession.

“There is growing concern that the economy will face a hard landing if the Federal Reserve raises interest rates to keep inflation down,” Soydemia said.

Soydemir offers the following recommendations:

It’s not all bad news. All employment categories except financial activity increased in his 2022, and total employment in all counties increased at a significantly higher rate than their respective long-term benchmark growth rates. However, total employment in the Valley may decline in 2023, but will show some growth in 2024.

Other report highlights include:

real estate: The most worrying indicator to watch is the 30-year fixed rate, which has begun to show the steepest rise ever seen in the series. In 2022, housing permits rose his 18.92% and house prices rose 21.46%, reviving fears of a housing market bubble. His double-digit rise in house prices we see in 2022 and 2021 does not appear to be sustainable, and we expect rates to return in line with benchmark growth rates.

Prices and Inflation: With average inflation of 8.29% in 2022 and average weekly wages rising by 3.28%, lower real wages and significantly lower purchasing power are expected to continue in the coming months. Other factors adding upward pressure to overall price levels are the ongoing Ukrainian-Russian war and unresolved supply chain issues. Inflation could fall at a very moderate rate, but a fall to the Federal Reserve’s 2% interest rate target is unlikely in the very near future.

Banks and capital markets: There has been a clear shift in the dynamics of Silicon Valley community bank gross deposits and net lending. This is him in 2020 and he is about halfway through 2021. There was no additional increase in net loans and leases in the Valley. This reflects a tougher stance on community bank lending. Non-accreted Valley Community Bank assets are starting to grow faster in 2022 than they did in 2021, and are likely to increase if the unemployment rate continues to rise. His 30 days to default Community Bank assets and his 90+ days assets to default showed sharper increases in 2022 than the previous year.

To read the full report, please visit

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