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April 2009 Quarterly Forecast
> Near Term Forecast
Levan Efremidze, Economist, UCLA Anderson Forecast
The East Bay is battered by the same cruel economic forces as the U.S. Although abnormal when compared to historical evidence, to a large extent the depth of the current recession is similar in for East Bay, California and the U.S. Before the recession, the East Bay was one of the biggest beneficiaries of the housing construction boom. But as the U.S. economy started to suffer with the balance sheet recession, the East Bay was not spared. The region continues to lose jobs; the unemployment rate is climbing and incomes are shrinking. In this report we examined the East Bay’s quarterly performance and its near term outlook within the context of salient economic factors, such as guarded consumer spending, plummeting business investment, shrinking global trade and a near-stabilizing housing sector.
East Bay retail is the only private sector showing signs of a turnaround. Construction losses are receding and housing prices are close to finding a bottom. As businesses are still carefully watching consumers, housing, financial conditions and the global trade, business investment continues to plummet. As a result, high-tech manufacturing and service sector incomes and payrolls are under pressure in the East Bay.
Our 2009 predictions are still quite gloomy for the East Bay economy, with encouraging signs of a turnaround towards the end of the year. Employment will continue to shrink throughout 2009, and real income and taxable sales will contract. The East Bay will lose approximately 20,000 jobs in the next three quarters of 2009, the unemployment rate will reach 11.6% and real personal income will decline by -1.4% during the year. Taxable sales will shrink by -5.6%. The East Bay will start the economic recovery at the end of 2009, as the housing market stabilizes and business investment returns.
Next: "The California Economy: Running Out Of Gas"
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