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Uploaded: Tuesday, January 22, 2013, 5:49 PM
Local economy has a bright future, economist says
Quality of life, educated workforce keeps employers in the region
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by Jessica Lipsky
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.Are you receiving Express, our free daily e-mail edition? See a sample and sign-up for Express.
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Posted by George, a resident of the Alamo neighborhood, on Jan 23, 2013 at 6:42 am What a joke! The next few years look "unsure"... but the 10-15 year horizon looks "positive"?... and this equates to a "bright future"? Admittedly, our local economy may stay ahead of the national curve due to local tech companies... unless they decide to flee Cali's ever increasing punitive taxes. Nationally, our economy will remain "sunk" under the continuing spending binge of the Obama administration and it's failure to deal with the structual components of entitlement programs which will only sink our economy deeper into the abyss. The national debt and annual deficit will not allow our economy to flourish... and continuing to hide from the problem and "kick the can down the street" only makes the situation worse. So, Danville Express, continue with your rosie articles that gloss over the debt/deficit problem. The American press has become nothing but a lap dog for the Obama administration by running interference for its continuing failure to provide sensible, economic leadership. Good dog.
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Posted by Another Failed Politician, a resident of the Walnut Creek neighborhood, on Jan 23, 2013 at 9:57 am
Well said George.
Economists for the Bay Area Council (and similarly others) have no choice but to be positive. They are paid for pure "public relations" and must try and show the best outlook they can. They twist the numbers and economics for the sole purpose of being positive. It's in their job description.
Get a clue people.
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Posted by Louise, a resident of the Danville neighborhood, on Jan 23, 2013 at 10:56 am I don't know where this economist got his figures, but Contra Costa does not have the highest median home price in the country. It is beat out by Marin County. Also, just because people seem to be spending now because we live in an affluent area, wait until they have to pay their high state and federal income taxes - for high earners it will be a total of 63%! High earners will feel the pinch when they do their taxes in 2014 when the Affordable Health Care tax of 3.8% hits and the additonal dividend tax hits too. So far it may seem ok, but if government spending continues on the same path and California continues to raise taxes the middle class will feel it too. And retail is doing well! What about all the empty retail space in Danville? I guess he didn't take a look around. This economist did not talk about higher income taxes and how this would effect the local economy and spending habits of the affluent. It was a paid political announcement by a paid political shill.
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Posted by Sylence Dugood, a resident of the Danville neighborhood, on Jan 23, 2013 at 12:40 pm Excellent points...I suggest that we take a hard look at entitlements as a first priority. A recent scholarly paper by Wang et al. (Lancet 2012; 380: 2071–94) clearly presents and rigorously defends sound predictions that by sometime in 2015 we will, for the first time in recorded history, have more above the age of 65 presented and accounted then those below the age of 5. A predicament nonetheless. Given that it is a well recognized position in the healthcare industry that, on average, all of us over 65 utilize our healthcare system nearly 7-times more (or to a greater extent) then those under 5. More so, for those in the business, the ratio that is closely tracked is the number of 'economically active' (i.e. FTEs) to those that are 'retired' (definition varies but for the sake of argument let's just consider those on the Federal SS role-call). By most estimates, this ratio will be less than unity within a generation. To drive numbers, depending on your sources, the worldwide healthcare market (in developed nations specifically) is on the order of $5.5 TRILLION. This number, depending again on your sources and who you believe, is projected to grow to $8 TRILLION by 2022. Remember these numbers are not necessarily deficits but are market projections. Heck of a bill for medicare given that most of us paid pennies in past decades but draw dollars today.
So given that many who take the time to post during the day (isn't this better than doing it over bridge or pinochle?) are in the non-economically active category, why not take a glass half-full approach and afford the 'economically' active a little HOPE for a more prosperous tomorrow?
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Posted by Dave, a resident of the Danville neighborhood, on Jan 24, 2013 at 1:32 pm Actually, the budget deficit has been shrinking in absolute dollars each year under President Obama and the federal budget (amount we spend) has been shrinking as a percentage of GDP each year. It's not that spending is increasing too much. It's that the economy is still stalled and we are not raising the revenue that we used to raise.
That said, we do need to trim the defense budget as those two sorry wars are coming to an end, and as we (hopefully) realize that the U.S. doesn't need to be (and can't afford to be) the sole policeman of the entire world. Should be some decent savings there.
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Posted by Ben Bernanke's better-looking brother, a resident of another community, on Jan 25, 2013 at 10:35 am Why all the doom-n-gloom, chicken-littles? Do these numbers look bad to you?
Unemployment rates for December, 2012:
Danville: 4.3 percent
Dublin: 5 percent
Livermore: 5.3 percent
Pleasanton: 4.1 percent
San Ramon: 3.4 percent
They may be helped a tenth or so by seasonal retail, but they seem to show that the sky is very much in-place.
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Posted by Joe, a resident of the San Ramon neighborhood, on Jan 25, 2013 at 9:51 pm Life in San Ramon is good.
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