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April 2009 Quarterly Forecast
> Overall Employment Conditions in East Bay
Levan Efremidze, UCLA Anderson Forecast
Although the East Bay labor conditions continue to sour, the speed of contraction is dropping. In this section we contrast job markets of East Bay, California, San Francisco Metro District, San Jose MSA and the U.S. We also examine quarterly dynamics of East Bay employment sectors.
Figures 8a and 8b.
Sources: BLS, CA EDD, UCLA Anderson Forecast
The East Bay is experiencing the deepest employment recession since 1970. We do not know its duration yet. Figure 8a illustrates that employment has not recovered fully from the 2001 recession as manufacturing employment never returned to the previous peak due to increases in productivity and outsourcing. When the current recession hit in December 2008, payroll employment was still 2% below the previous peak of 2001. The previous recession was much larger in the East Bay than in California and the U.S., the complete opposite of the 1991 downturn. While the Internet and information technology recession in 2001 hit regions that had a high concentration of information technology firms, such as the East Bay, San Jose and San Francisco, the 1991 recession was driven by the defense contraction and the Bay Area was spared but the Los Angeles Area was hit hard. The current recession finds the East Bay and other Bay Area regions mostly tracking with the California and U.S. employment numbers – a large contraction has taken place throughout the nation. The only difference among the three Bay Area regions is that the decline in the East Bay started earlier, due to an industrial structure that exposed the region to the real estate decline early on. The magnitudes of decline from the previous peak vary in the range of 4-5% in the East Bay as well as the other Bay Area regions (Figure 9).
Figure 9.
Sources: BLS, CA EDD, UCLA Anderson Forecast
The East Bay’s retail sector was the only private sector with quarterly gains in the first quarter (Table 1 and Figure 10). With the exception of the Federal government sector which also posted a small quarterly gain, all other sectors shed jobs. The typical timing dynamics of different GDP sectors have been well documented in the previous national, state and East Bay reports. As a reminder, the sequence of declines in typical consumer recessions goes this way: homes, durables, equipment and structures. The recovery sequence has the same order. While employment dynamics lag the output cycles, the sequencing would still apply. With this in mind, in the East Bay, we see that construction and professional services job losses have declined from the previous quarter, retail has made small gains, and durable and nondurable goods manufacturing, education and health services, and hospitality are still shedding an increasing number of jobs. It seems that the East Bay will continue cutting payrolls, but at a slower pace throughout this year, as it is typical to see continued job losses beyond the output cycle trough.
Table 1.
Figure 10.
Sources: CA EDD, UCLA Anderson Forecast
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