Bay Area:

Although Issues Impacting Local Economy, Growth is Set for Next 1 – 2 Years

Although the Bay Area’s intensely high cost of housing and other issues are impacting its economy, the slowing-yet-solid pace of local employment and consumer spending are expected to keep growth humming along for at least the next 1 – 2 years.

That’s according to the most recent forecasts published by Beacon Economics, the UC Berkeley Haas Schools of Economic Analysis and Policy, and the California and Nevada Credit Union Leagues in November and December. The keynote speakers’ opinions spotlight intriguing viewpoints, trends and projections so your credit union can plan appropriately.

Beacon Economics
Released in early November within Beacon’s “Fall Regional Outlook” reports, as well as December forecast conferences that the consultancy firm has presented for:

The Bay Area economy is in the middle of the longest expansion in recorded U.S. history, and it is expected to continue along the same growth trajectory for at least the next two years (2020 – 2021). Particularly, the health care/social assistance and leisure/hospitality employment sectors are driving California job growth — and the state’s annual median home-price appreciation is showing a noticeable slowdown (although still very much in the positive).

“Currently, there is little sign of the kind of collapsing imbalances or rapid shifts in aggregate demand that would be capable of pushing the economy into a downturn or even a protracted slow-growth slump,” the forecast report states. California’s economy will grow in tandem with the United States as the nation’s Gross Domestic Product (GDP) — the traditional measurement of economic growth. The U.S. economy will experience approximately 2 percent “real” GDP growth in 2020 and 2.5 percent in 2021. Much of the confidence surrounding the health of the U.S. economy lies with the consumer. Consumer spending is now growing at roughly the same quarterly pace as U.S. GDP.

This should not imply that there aren’t “stressors” on the economy. “Rather, nothing on the current horizon rises to the level of imbalance or shock that could cause a downturn,” the forecast report states. However, it is cautioned that the outlook could change. “It is critical to maintain vigilance in monitoring economic trends and activity given the unpredictability and hyper-partisan nature of current U.S. policymaking.”

Click here for San Francisco's latest non-farm employment and economic trends. Also included is industry and sector analysis, as well as the pulse of the area's housing market. The San Francisco metropolitan area’s unemployment rate will remain in a narrow range around its current reading into the foreseeable future. Total nonfarm employment in the region is expected to grow in the mid-3 percent range over the next 12 months. “San Francisco is a marvel of an economy,” the forecast report states. “Month after month and quarter after quarter, the region’s labor and real estate markets seem to grow in tandem and reach new heights. While home price appreciation has appeared to somewhat slow, real estate is still finding a way forward, as evidenced by continued gains in the construction industry.”

Click here for the Eastern Bay Area’s latest non-farm employment and economic trends. Also included is industry and sector analysis, as well as the pulse of the area's housing market. The Eastern Bay Area metropolitan region’s unemployment rate will remain in a narrow range around its current reading into the foreseeable future. Total nonfarm employment in the region is expected to expand by 1.5 percent over the next 12 months. “A number of big players are helping drive the East Bay economy as the current expansion continues,” the forecast report states. “The construction and logistics sectors have carved out a leading place at the table in terms of contribution to jobs growth. Additionally, unemployment in the region has rejoined the sub-3 percent club along with neighboring San Francisco and the Southern Bay Area. Meanwhile, the local housing market remains a challenge while commercial real estate has hit its stride.”

Click here for the Southern Bay Area’s latest non-farm employment and economic trends. Also included is industry and sector analysis, as well as the pulse of the area's housing market. The Southern Bay Area metropolitan region’s unemployment rate will remain in a narrow range around its current reading into the foreseeable future. Total nonfarm employment in the region is expected to grow in the mid-2 percent range over the next 12 months. “As the seasons change, the Southern Bay Area continues to experience impressive labor market activity,” the forecast report states. “On the flip side of the coin, however, the challenges of an extremely tight and expensive housing market are being realized in full.”

UC Berkeley’s Haas School of Economic Analysis and Policy
Presented on Nov. 25 by the Fisher Center for Real Estate and Urban Economics:

To access any reports from this forecast conference: email Liz Linton.

Forecast conference articles in the local and national news media:

California and Nevada Credit Union Leagues
Presented on Dec. 9 by Dr. Robert Eyler, economist at Sonoma State University and board member of Redwood CU:

What credit union members may perceive is happening in the economy, geo-politics and the financial markets as it’s reported in the news media versus what’s realistically happening doesn’t always align. “We should expect the buzz surrounding current national trade policies to eventually come to a rest for the United States — and end up maybe even being a positive for the United States. But for now, it just leads to more volatility leading into the presidential election,” Eyler said. “These and many other financial market issues are things that your employees and members are going to see a lot of news around, as well as consternation going into 2020.”

A “mild” recession may hit the economy sometime in 2021 or 2022. It might be so mild that annual U.S. Gross Domestic Product (GDP), the traditional measurement of growth, could still squeeze out somewhere between a zero-to-1 percent growth rate for the 12-month period surrounding the beginning and end of that contraction.

Leading economic indicators in California and Nevada show the states’ economies are slowing down in tandem with the entire nation right now. Yet neither are signaling an imminent recession within the next 12 months. Next year, 2020, could impact 2021 if potential impeachment by both branches of Congress ever led to removal of President Donald Trump from office. It would cause upheaval in the U.S. and global financial markets. However, such a scenario most likely won’t play out. In fact, it’s highly likely Trump could be reelected given historical, economic and political context.

“We have to assume uncertainty will rise as we creep toward the summer of 2020,” Eyler said. “However, the Federal Reserve’s short-term interest rate target is likely to move down again going into 2020 and then stall until the elections. The California and Nevada economies are likely to continue growing, but slower.”

For more: Credit union leaders can view the “2020’s Big Questions: Economy, Rates, and President Trump” archived webinar at any time.

Local County-Level Perspectives
The California Department of Transportation (Caltrans) has released its updated 2019 – 2050 demographic forecast for all counties in California regarding local jobs, wages, home prices, population, personal income, taxable sales, net migration, wildfire issues, public policy implications, legal cannabis, industries, workforce, and more.

For forecasting purposes, the shorter-term economic projections for 2019 – 2024 within this annual county-wide report by Caltrans do not factor in an economic recession into its local scenarios. They are only highlights stemming from a baseline projection (view the report above for more information).

Bay Area Occupational/Industry Trends
Additionally, download Chmura Economics and Analytics’ latest Bay Area Economic Overview to see 10-year future trends in worker occupations, employment, wages, cost of living, and industries.

Your Local Region’s GDP: 2001 - 2018
The U.S. Bureau of Economic Analysis has released an overview and history on "Local Area Gross Domestic Product from 2001 - 2018" for individual counties in California and the entire nation. It includes highlights and trend breakdowns for large, medium and small-population size counties, as well as the U.S. dollar size of economies for each county. Tables and files are included for download and review.

Latest CA Population and Demographic Trends
The California Department of Finance has released its latest news — "State's Population Increases by 141,300 While Rate of Growth Continues to Decline" — regarding 2018 to 2019 population growth, which includes highlights and snapshot trends of each county and region across the state. (You can also download the long-term 2010 to 2019 demographic tables by clicking here)

Also, the department's deeper demographic breakdown (age, race, income, employment, poverty, health care, education, and social/housing characteristics), courtesy of the American Community Survey by the U.S. Census Bureau, can be found by clicking here.

County Income and Poverty Estimates
The U.S. Census Bureau has released its "Small Area Income and Poverty Estimates (SAIPE) Program", which gives single-year estimates of income and poverty for all counties in California and the entire nation — as well as estimates of school-age children in poverty for all 13,000-plus school districts.

Demographic Profile and Projections: Bay Area (9 counties)*  

  • Total population: 7.7 million (and will hit 8.4 million by 2025).
  • Working-age individuals (15 - 64 years old): 68 percent of total population in 2015 (and will fall to 64 percent by 2025).
  • Labor force (at least 16 years old who are working/looking for a job): 4.2 million out of 5.9 million adult population.
  • Labor force participation rate (adults who “want” to work): 71 percent (or 4.2 million individuals).
  • Unemployment rate: 2.4 percent (versus 3.9 in CA and 3.6 in U.S.)
  • Unemployed workers: 99,400.
  • Median household income: $102,000 as of 2018 (compared to $71,800 for CA and $60,400 for U.S.)
  • Poverty rate: 10 percent (versus 14.3 in CA and 14 in U.S.)
  • Education of population: 45 percent have a college degree; 26 percent some college; 15 percent high school diploma; and 14 percent no high school diploma.
  • * Combined counties of San Francisco, San Mateo, Santa Clara, Alameda, Contra Costa, Solano, Napa, Sonoma, and Marin
  • ** Data as of October 2019 from the California Center for Jobs and the Economy; California Employment Development Department; California Department of Finance; Federal Reserve Bank of St. Louis; U.S. Bureau of Economic Analysis; and U.S. Census Bureau

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