New restaurants on the horizon, but is Merced's economy in good shape?

As 2017 rounds out, the New Year brings with it the promise of some new places to eat in Merced and rising hopes for the local economy, according to city leaders.

Mayor Mike Murphy has dubbed Merced "a city on the rise," and Merced Economic Development Director Frank Quintero agrees.

Merced is on the docket for a high-speed rail stop and is expected to get an ACE train connector as well, not to mention the doubling of the UC Merced campus by 2020.

"I think now we're going up to the next level," Quintero said. "We've had more inquiries and interest from the Silicon Valley."

In the short term, Merced is expected to see its first Popeye's Louisiana Kitchen in January at Martin Luther King Jr. Way and 15th Street. Then there's a Steak n' Shake and KFC going up on Childs Avenue, where they'll open later next year.

Olive Avenue has a new CVS Pharmacy, and Starbucks is going up next door. And downtown now has Aces & Kings Cheesesteaks, and the El Capitan Hotel project is moving along, according to city staffers.

But the local economy is expected to rise at the slowest rate since the Great Recession, according to a report from lead author Gökce Soydemir, business economics professor at California State University, Stanislaus.

Employment growth (0.52 percent) throughout the central San Joaquin Valley slowed in 2017 compared with the long-term benchmark growth (1.17 percent). The lag in growth was attributed to lingering effects from California's drought, as well as President Donald Trump's shifting stance on immigration reform, the report said, though "slightly faster growth" during the next two years is predicted on the back of tax reform and other factors.

At 0.51 percent, Merced's employment kept pace with the Valley average. Stanislaus posted the largest job growth at 1.94 percent, while Kings saw a decline of 1.19 percent.

The number of permits pulled to build new houses across the Valley were down by less than half a percent from the previous year, according to the report. Economists often point to home-building as a sign of economic health because jobs and spending are often tied to new construction.

There have been about 180 permits this year in Merced, according to Scott McBride, the development services director on Merced. Several apartment projects around the city are also aimed at college students.

"It means construction jobs, real estate jobs, finance jobs," he said. "Once the home is built, they're going to be shopping at local stores, they're going to be consuming local services."

Rising prices to buy and rent continue in Merced, as well as much of the Valley, as there aren't many houses on the market, according to real estate agents. The new construction in Merced could alleviate some of that, McBride said.

The Merced County unemployment rate in November tallied 7.8 percent, which was down from 9.4 percent the same time last year, according to numbers released Friday by the Employment Development Department. That's the lowest December unemployment rate on record, which goes back to 1990, according labor analyst Steven Gutierrez.

The number typically rises to double digits in the fall and winter, when seasonal farm jobs end, but has remained steady this year, Gutierrez said. But it's not all good news, because some of the dip in the rate can be attributed to people in part-time jobs or who have stopped looking for work altogether.

November marked the seventh time this year Merced County had a single-digit unemployment rate. "At least that part is a positive thing," Gutierrez said

Cannabis businesses are something of a wildcard in Merced's economy. McBride noted marijuana retail, manufacturing, testing and other businesses would make up a new sector of the economy.

Other cities in the county have passed ordinances related to marijuana, but Merced's allows for the most diverse number of cannabis-related businesses. "We're still trying to get our arms around it," McBride said.

Soydemir said the Valley's economy faces a number of headwinds related to regulations and immigration rules.

"Overall, the Valley economy is likely to continue growing more slowly than in previous years," he wrote.

This story was originally published December 22, 2017 at 4:15 PM with the headline "New restaurants on the horizon, but is Merced's economy in good shape?."