Stanislaus State University's Fall 2025 San Joaquin Valley Business Forecast said the recession risk in the region is now estimated at 50%, a significant jump over the long-term average of 15% and signaling that a long-anticipated regional slowdown is fully materializing.
Small business owner Jack Large, who runs Play It Again Sports in Modesto, said the trend matches what he has seen in recent months.
Industries like retail trade, construction, financial activities, and leisure and hospitality services all posted declines, according to the study. Meanwhile, the forecast projects that the regional unemployment rate, currently just under 8%, will climb above 10% in the coming months.
Gökçe Soydemir, the Foster Farms Endowed Professor of Business Economics at Stanislaus State and author of the forecast, said the last time the region saw recession odds this high, outside the COVID-19 pandemic, was during the 2008 Great Recession.
Large said he has already had to reduce staffing.
Despite the uncertainty, Large said small businesses remain closely tied to the community and rely heavily on local support.
Maintaining cash reserves Continuing to rent rather than buy until interest rates align with long-term benchmarks Purchasing a home now only if refinancing later is feasible Taking advantage of falling bond yields Using flexible-rate financing and low-cost student loans to upgrade skills if laid off
The report concluded that initial signs of stabilization and improvement are not likely to emerge until the second half of 2026.
The biannual forecast is used by Central Valley businesses, investors, local and regional governments, and consumers to navigate economic trends with detailed projections on labor markets, housing, personal finance, inflation, and other indicators.
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