1. Napa Economic Summit: The Economy 2012: Napa, North Bay and Beyond Napa, CAOctober 28, 2011 Robert Eyler, Ph.D. Professor, Economics Frank Howard Allen Economics Research Fellow Director, Executive MBA Program Sonoma State University eyler@sonoma.edu 1

2. Current State of Affairs 2011 was a year of mixed signals Global: Europe, geopolitical uncertainty –May change tourism over time National: Recovery underway, slow from jobs weakness –May change both wine sales and tourism State: Revenue generation and public workers Local: Recovery slow and needs a jump start

3. Policy Issues How do we create jobs through Congress? –Temporary versus permanent job creation –Cost recovery versus investment Credit Supply Issues: reticence to lend –Riskiness in Europe not helping Credit Demand Issues: reticence to borrow –Interest rates low and stable as a result FED declaration on rates only as good as expected inflation 3

4. 4 Source: Federal Reserve Board

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7. Source: BEA (www.bea.gov)

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10. 10 California 2011-12 likely to be slightly better than 2010-11 Labor market still the big deal, and will remain in 2012 CA slowly bifurcating in terms of housing markets –Interior valleys: Japanese-like recovery –Wine country: general economic recovery and conversion of emerging world wealth to local housing/services demand California’s recovery hinges on two major factors –The expansion of the tech industry and it remaining here –How state government intends to fund itself

11. Source: BEA (www.bea.gov)

13. 13 TechPulse Index, Index (Jan 2007 = 100), 1990-Oct 2011 Source: FED SF and Federal Reserve

14. Napa County and the Region Napa has a place of economic strength in region –Creating jobs in wake of recession –Tourism and wine to be the long term niche Need to continue to strengthen this niche –Northern and Southern Napa working in cohesion –Market to emerging world wealth: go to NVC for Mandarin! Competition is regional and growing 14

15. 15 Employment, Seasonally Adjusted, 1990 – Aug 2011, Index 1990 = 100 Sources: EDD and CREA at SSU

16. Sources: BLS and CREA at SSU 16 New Unemployment Insurance Claims, Index (2002= 100)

17. 17 Companies Gained and Lost, Napa County, 2006-11 and 2009-11 Sources: EDD and CREA at SSU

18. 18 Jobs Gains and Losses, Napa County, 2006-11 and 2009-11 Sources: EDD and CREA at SSU

19. Local Housing Market Recovery: Keys Job creation in technology industries National economic recovery continuing Recognition housing needs to follow general economic recovery, and will not drive it International audience for real estate welcomed and marketed 19

20. Median Price of Existing Detached Homes Napa County, August 2011: $354,760, Down 10.0% YTY SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

21. SOURCE: California Association of REALTORS® Distressed Sales by County (Percent of Total Sales)

22. Where are we headed? Recession-like activity through mid-2012 in labor markets Napa showing overt signs of recovery –Maybe best in region Recognize regional connections/economies No signs of rapid recovery yet –Economy to grow through 2012 –Napa well poised for the long term 22