The local economy in the city of Napa remains in relatively good economic shape until 2022, having spent much of 2021 following the financial downturn from the COVID-19 pandemic.
But the rise of the omicron COVID-19 variant could hamper this local recovery, depending on how it unfolds.
That’s according to Robert Eyler, professor of economics at Sonoma State University and president of Economic Forensics and Analytics Inc., who gave a presentation on the local economy to Napa City Council on Tuesday.
“For the city of Napa, things look pretty good until 2022,” Eyler said. “The macro environment has become a bit murkier, but that may not affect the city’s economy too much.”
Eyler said employment in California in October was about 95% of what it was before the pandemic began and continues to improve. Employment in the city of Napa, he said, has returned entirely to pre-pandemic levels.
Napa’s local economy has ranked among California’s best among travel destinations, Eyler said. This is largely because some great areas of historically popular travel in other cities, like conference activities, have yet to make a big comeback. Napa has also emerged as an attractive destination for people who wish to leave urban areas, he said.
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“Napa really had kind of a perfect, positive recovery storm where people wanted to get out of the more urban areas of California,” Eyler said. “… So 2022, at least if you look at a lot of forecasting in tourism, is really a year that is going to test a lot of courage in terms of markets when it comes to: areas that depend on business travelers, s ‘they are not coming back, what will that mean for these areas and will we see a lot of changes. Places like the city of Napa live in these really cool niches that have apparently already returned. “
Napa County’s hotel and motel occupancy rates also improved, reaching 71.9% in October, a marked improvement from 52.9% in October 2020 and close to 74% in October. 2019, according to Eyler. (Overnight stays, Eyler said, are linked to higher tourism spending compared to people who only visit during the day.)
Napa’s occupancy recovery was greater than that of Sonoma County, Marin County and San Francisco, said Eyler, who all had higher occupancy rates than Napa in October 2019 but had lower occupancy rates. lower rates in October 2021.
The increase in cases of COVID-19 and the omicron variant, Eyler said, could have an unexpected impact on Napa’s economy, primarily in terms of its impact on tourism.
“One of the big caveats to all of this is how omicron will move and remove part of the trip,” Eyler said.
Economists are also keeping a close watch on inflation, which has risen significantly this year, Eyler said. Three main areas drove prices up for most of 2021: the first is the automotive market, which suffered from supply chain delays and a lack of semiconductors; the second is the housing market; the third is food and energy prices, according to Eyler.
Economists believe car and house prices will stabilize a bit in early 2022, Eyler said, but inflation could become a serious problem if prices continue to rise rapidly for food and energy.
Several other factors in the current economic environment, such as increased wages for workers – especially for lower-paid industries like the hospitality industry – can also have impacts, Eyler said, but it’s hard to predict at what point. point these impacts will ultimately be positive or negative.
Overall, Eyler said, the city of Napa is doing better than most similar cities, even in areas that have suffered most from the economic downturn.
“We are seeing most industries climb to pre-pandemic levels across Napa County,” Eyler said. “And very much like coming out of the Great Recession, Napa County and the city of Napa are truly like flagships of the recovery. I am not saying this just because I am here today. If you look regionally at North Bay, Marin County is also relatively well at this point, but not fully. While the city of Napa and Napa County are very close.
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You can reach Edward Booth at (707) 256-2213.