Summary
East Bay and California Employment
A Comparison of Recessions
Housing Sector Update
Commercial Real Estate Survey Results
Forecast
The California Report:
Financial Meltdown and Consumer Uncertainty; From Wall Street to El Camino Real
The Balance Sheet Recession
You Haven't Seen THAT Before!
 
The
Cities of
Alameda
Antioch
Albany
Berkeley
Brentwood
Concord
Dublin
El Cerrito
Emeryville
Fremont
Hayward
Hercules
Livermore
Martinez
Newark
Oakland
Oakley
Piedmont
Pinole
Pittsburg
Pleasant
Hill
Pleasanton
Richmond
San
Leandro
San
Ramon
Alameda County
Contra
Costa County
This forecast
was prepared by:
Economists
Levan Efremidze &
Jerry Nickelsburg
UCLA Anderson Forecast
www.uclaforecast.com
East
Bay EDA Contact
Stephanie Brown
(510) 272-6843
stephanie@eastbayeda.org
East
Bay EDA
1221 Oak St., Ste. 555
Oakland. CA 94612
Serving the East Bay
- the Bright Side of the
San Francisco Bay
For more information on
the East Bay visit
www.eastbayeda.org
Archived newsletters & forecasts
Reports & studies on the East Bay
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JANUARY
2009 EDITION
INTRODUCTION
East Bay EDA is
pleased to provide the East Bay Quarterly Forecast, authored by
Levan Efremidze
of the UCLA Anderson Forecast.
Click here to Download
the PDF (529k) version of this report.
This quarter's forecast includes executive
summaries of the UCLA Anderson Forecast's
National and California Outlooks, authored by Jerry Nickelsburg, David Shulman,
and Edward Leamer.
To view the Bay Area "by the numbers", download the
Quarterly Indicators Sheet for Q4 2008. This one-page summary includes GDP, CPI, employment, housing, construction permit, hotel, airline passenger, and foreign trade data.
by Levan Efremidze
Summary
The East Bay economy continued its decline in the last quarter. The
seasonally adjusted unemployment rate for
the East Bay jumped to 8.1% in December
2008, when more than 11,800 payroll jobs were eliminated1. Most of the quarterly losses were concentrated in the retail, construction, employment services (temporary workers), durable goods manufacturing, and information sectors. This is evidence of a further deepening of the recession. Residential construction and financial sector stress, the precursors to this recession, were in place by mid 2007, but the 4th quarter employment data show the real force of the recession has expanded to retail, leisure & hospitality, and consumer related sectors. The recession has not yet begun to abate and therefore, we want to look at how much worse the decline will get, and how much longer the decline will last. In this report we contrast the East Bay to the U.S., California, and other Bay Area regions, study the previous two recessions, examine some housing sector fundamentals, and commercial real estate prospects.
2009 will be a year of increasing unemployment, falling real income and increasing job losses. The East Bay will begin an economic recovery at the end of 2009, coincident with the beginning of the U.S recovery. Though growth will be slow coming out of the recession, the long term prospects for East Bay economic growth, fueled by investments in “green” economy technology, computers and electronics, and export oriented products, are bright.
The industrial structure of the East Bay economy is similar to that of California, except that the East Bay’s construction, government, and education, health care & human services sectors tend to be somewhat more important and the consumer sectors of retail and leisure & hospitality tend to be somewhat smaller. This explains why East Bay labor markets have been performing less well than California up until September, and why they are much more similar in performance today. Prior to the recession, job loss in residential construction was more heavily concentrated in the East Bay. Now, job loss in consumer related sectors, while larger in percentage terms for the East Bay than for the state, are a smaller component of the total East Bay employment picture.
Continue Reading "East Bay, Bay Area and California Employment"
Forecasters generally rely on the past to extrapolate or predict the future. Since the current recession has been underway for a year now, it is time to look at this methodology to see if it will help us understand the future evolution and recovery of the East Bay economy. The depth of this recession as measured by the fall in GDP in Q4 2008 makes it look a bit like the 1981 recession, yet that downturn came on the heels of the 1980 recession. Moreover, for the East Bay economy much has changed since 1981. Consequently we will look for clues in the past data by comparing employment during the more recent 1990 and 2001 recessions to the beginning of this recession to see whether there are any common features, or if not, what might be different this time. Specifically, we will focus on the duration and magnitude of changes in key employment sectors from their peak levels. First we look at the behavior of nonfarm employment, and then construction, manufacturing, retail, finance, information, professional & business service, leisure and hospitality, and government sectors.
Continue reading "A Comparison of Recessions"
Our previous report saw indications that the housing downturn in the East Bay was coming to an end and if so, it would no longer be a drag on East Bay economic growth. We now re-examine this analysis, since the economic environment has changed drastically over the last three months. To ascertain to what extent we should modify our previous forecast, we look at several factors characterizing supply and demand conditions in the East Bay housing market.
Continue reading "Housing Sector Update"
The Allen Matkins/UCLA Anderson Forecast Survey Project now includes a survey panel for each of the three Bay Area markets. The survey is designed to measure panel’s expectations of office market conditions three years from now. The November survey results show a general pessimism on the part of the panel for occupancy and rental rates in the Bay Area. There were not any stark differences between the panel’s view of the East Bay and that of San Francisco and Silicon Valley.
Continue reading "Commercial Real Estate Survey Results"
The headwinds of an accelerating U.S. recession during the last quarter did not spare the East Bay economy. The unemployment rate jumped to a seasonally adjusted rate of 8.1% and more than 11,800 payroll jobs were eliminated. A substantial housing downturn has been a drag on East Bay employment since the summer of 2007, but is now beginning to abate. However, the financial crisis of September created an extraordinary uncertainty about the future of the economy and U.S. consumers and businesses reacted with a sharp spending contraction. The financial turmoil and the recession of U.S., the world financial center and largest economy, also spilled over to the rest of the world. The East Bay fully reflects the trends observed in the U.S. and California economies during the fourth quarter.
Continue reading "Near
Term Forecast..."
CALIFORNIA
By Jerry Nickelsburg, Senior Economist, UCLA Anderson Forecast
In the last California report we struck a note of optimism about the coming quarter. What we did not expect was the spectacular Panic of 2008. California consumers reacted in a predictable way; they stopped shopping and began to conserve their resources. Our optimism remains only in tempering our pessimism. California is going to share the national recession with negative economic growth through the middle of next year and high unemployment into 2010. The U.S. recession will be unevenly felt across the state .The Inland Empire, Orange County, the East Bay and the Central Valley will be hit the hardest as the recession provides a double whammy with a generalized downturn in demand and a postponement of a recovery in residential construction. The coastal areas will not be immune as a U.S. downturn means that imports flowing through California’s ports will continue to decline, and recessions in Europe and Japan mean that export demand for California manufacturing will be muted. In short, the forecast for the next three quarters is one of contraction in economic activity followed by the beginning of a slow recovery.
Continue reading "The California Report..."
THE NATION
By David Shulman, Senior Economist, UCLA Anderson Forecast
The news from the economy is bad. The recession that we had previously hoped to avoid is now with us in full gale force. We now expect that real GDP will decline by 4.1% in the current quarter and decline by another 3.4% and 0.8% in the first and second quarters of 2009, respectively. Because Europe and Japan are already in recession and China and India are suffering from a significant slowdown in growth, the export boom of the past few years will wane. Make no mistake, the global economy is in its first synchronized recession since the early 1990s. Moreover, with tepid post-recession growth of around 3%, the unemployment rate is forecast to rise from October’s 6.5% to 8.5% by late 2009 or early 2010. Concomitant with the rise in the unemployment rate will be the loss of an additional two million jobs over the next year.
Continue reading "The Balance Sheet Recession"
By Ed Leamer, Director, UCLA Anderson Forecast
Forecasting depends on some reasonable similarity between the current situation and episodes in the historical data. But there is SOOO MUCH over the last several months that we haven’t seen before. These abnormalities limit the power of statistical forecasting, forcing us to rely more on hunches. Just so you know, here are some of the features of the data that are so unusual, as well as some that are not that strange.
Continue reading "You Haven't Seen THAT
Before!"
FOOTNOTES
1 Here we report seasonally adjusted changes in payroll employment from September to December of 2008.
2
http://www.dqnews.com/News/California/Bay-Area/RRBay090121.aspx
3
http://www.dqnews.com/News/California/Southern-CA/RRSCA090119.aspx
4 Daniel Miller, Still Building, Believe It or Not, Los Angeles Business Journal, January 26, 2009
5 http://factfinder.census.gov
6 Mulholland Sarah and Jody Shen, “Commercial Mortgage Securities Holders Blame Paulson,” Bloomberg News, November 21, 2008.
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