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Better economic forecast for Oakland/East Bay

OAFC BBS - All Topics: Archive: Better economic forecast for Oakland/East Bay
Top of pagePrevious messageNext messageBottom of pageLink to this message   By chris_d on Saturday, February 01, 2003 - 10:27 pm:

While the majority of the story is downbeat about the economy in 2003, this story highlights why the East Bay is positioned to come back more quickly than SF or the South Bay. Here's the excerpt, followed by the link and the whole news story:

The East Bay could turn into an economic leader in the Bay Area, according to Christopher Thornberg, an economist with the UCLA Anderson Forecast who has prepared a separate analysis of the Bay Area economy for the Economic Development Alliance for Business.

"My forecast is the East Bay will be the first region in the Bay Area to really recover from the recession," Thornberg said. "The East Bay is a pocket of strength. Silicon Valley is a mess and San Francisco is somewhere in the middle."

http://www.bayarea.com/mld/bayarea/5075447.htm

Posted on Fri, Jan. 31, 2003

Forecast: No boom in sight for region
East Bay will likely be the first to see economic recovery, researcher says

By George Avalos
CONTRA COSTA TIMES

OAKLAND - The Bay Area economic locomotive that powered the nation's economy during the 1990s has turned into the country's caboose.

In a downbeat assessment Thursday about the regional economy, economists with the Association of Bay Area Governments suggested that the tremendous job growth during the boom years of the late 1990s won't return for years, if ever. The technology and telecommunications implosions are not just dips, they said, but part of a fundamental reshaping of the Bay Area economy that will likely leave it growing slowly in the years ahead.

Job creation will be sluggish, and retail sales, which have plunged the last two years, will increase only slightly in the next two years.

"When do we see some sunshine in the Bay Area? Have I mentioned this is an El Niño year?" quipped Paul Fassinger, an economist with ABAG, which sponsors an annual gathering of economists to review and preview the performance of the Bay Area and California economies.

"We have seen a re-alignment of the Bay Area's economy," Fassinger said. "Just a few years ago, the Bay Area was stellar; high-tech made it a leader. Now we see the flip side. ... We have gone through a very rapid and significant shift."

As a result, creation of jobs in the Bay Area is expected to stagger during 2003 and 2004, primarily because of the depressed employment picture in Silicon Valley, which has lost 11 percent of its work force since 2000.

The Bay Area is expected to expand employment by only 0.4 percent during 2003, ABAG predicted.

For the East Bay, there was a bit of good news. While the Bay Area is struggling, this area should narrowly out-perform the entire region by increasing employment 0.5 percent in 2003. Silicon Valley employment, by comparison, will be virtually flat in 2003, ABAG predicted.

The East Bay could turn into an economic leader in the Bay Area, according to Christopher Thornberg, an economist with the UCLA Anderson Forecast who has prepared a separate analysis of the Bay Area economy for the Economic Development Alliance for Business.

"My forecast is the East Bay will be the first region in the Bay Area to really recover from the recession," Thornberg said. "The East Bay is a pocket of strength. Silicon Valley is a mess and San Francisco is somewhere in the middle."

A recovery could blossom in the East Bay more quickly than in San Francisco or the South Bay primarily because Alameda and Contra Costa counties are less dependent on exotic tech firms.

At the core of ABAG's outlook is Fassinger's view that job growth won't again be dynamic in the Bay Area until some new breakthrough technologies are developed. Fassinger said the Bay Area's tech firms would have to provide products and services akin to those that unleashed the computer and software revolutions of the 1970s and the Internet boom of the 1990s. But until that happens the Bay Area won't return to the leading role it has played in the nation's economy over the last several decades.

Certainly consumers and companies are using technology as crucial tools for productivity. And people do use the Internet to buy a variety of goods and services. But Fassinger sees the current technologies as no more than gradual improvements.

"High-tech is no longer a watershed event," Fassinger said. "Technology has become more of a mature industry."

Among the other highlights of the ABAG forecast:

Bay Area household income, which fell in 2001 by 2.5 percent, is thought to have risen 0.2 percent in 2002. Household income in the region should rise 1.7 percent in 2003 and another 1.4 percent in 2004.

Inflation should remain tame. Bay Area consumer prices rose 1.4 percent in 2002 and should rise 2.1 percent in 2003 and another 2.4 percent in 2004 on an annual basis.

Retail sales will continue to struggle. After falling 13 percent in 2001, adjusted for inflation, taxable sales fell by an estimated 5 percent in 2002. Inflation adjusted sales should rise less than 1 percent in 2003 and about 2 percent in 2004.

Consumer spending has propped up retail sales and the economy even during the downturn, but with employment worsening, it's unclear how long that can continue, said Brian Kirking, an ABAG economist.

"The message is 'Just buy, baby,'" Kirking said. "But what if we don't have a job?"

George Avalos covers the economy. Reach him at 925-977-8477 or gavalos@cctimes.com.

Top of pagePrevious messageNext messageBottom of pageLink to this message   By jace on Sunday, February 02, 2003 - 06:27 pm:

Nice Al reference.


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