Business owners and those interested in finance got an inside look at the future on Friday along with pleasant news about the Bay Area's economy, as Bay Area Council Chief Economist Jon Haveman spoke to members of the Danville Area Chamber of Commerce.
Although the business climate through the next couple of years is unsure, Haveman said the 10 to 15 year outlook is positive. Employment in the Bay Area is growing and the San Ramon Valley is doing quite well.
"High tech starts throughout the Bay Area is good for the East Bay and Bay as a whole," Haveman said, adding that the region has 12 percent of all computer and electronics manufacturing jobs -- six times more than it should. "Information and business help sectors are good because they're high wage and those people spend."
The result is a multiplier effect that can be seen locally. For every one high tech or high wage job, four lower-paying service jobs are created. While stalwart businesses like Chevron and AT&T bring money to the area and are doing reasonably well, Haveman said retailers are also doing well.
"The retail sales numbers are really good for the town of Danville, I think they're pretty good throughout the San Ramon Valley," he noted. "That's partially because of the demographics; this is a higher-income region, higher income folks nationwide are doing relatively well. And they're spending, which is helping to drive the local economies."
Specific growth sectors in the Bay Area include professional and business services, the information sector, wholesale trade and, surprisingly, construction. San Jose in particular has seen a boom in multi-family housing and commercial building. Personal and business services, along with education and hospitality, will see growth through 2014.
However, Haveman said the local economy is stalled by heavy regulation both regionally and statewide, a hollowing out of the middle class labor force and high home prices. Although median home prices are down 31 percent, Contra Costa County had the highest median price anywhere in the country.
"In the Bay Area (home prices have) gone way up because we don't build," Haveman told the sold-out crowd at the Blackhawk Country Club. "This region did fare well in terms of the foreclosures."
Despite high home prices and what some call stiff regulations, Haveman said companies are still drawn to the area because of its high quality of life, educated workforce and innovative attitude. Sixty-two percent of San Francisco's workforce has a bachelor's degree, compared with 20 percent elsewhere and, Haveman noted, "there is a lack of a fear of failures in the Bay Area economy that is extremely important."
Although the Bay has broad challenges and threats remain to the broad-based economy, Haveman said retiring Baby Boomers in the next 10 to 15 years will provide job opportunities to 30- and 40-year-olds. At that time, employers will need to learn to attract that age group to an expensive area.
"The U.S. Economy is doing well…. My worry is that Washington D.C. can derail that. The Bay Area economy was one of the first to start recovering and I don't see that changing," Haveman said. "Washing is really pushing austerity right now and cutting government spending is not what we should do. We're on tenuous footing and austerity could push us off the rock we're growing on."
Haveman concluded his luncheon talk with the assertion that the Bay Area economic forecast is positive. Although it may slow a bit during the first of the year because of the fiscal cliff, the economist said things will eventually turn around.