Research Facts & Figures > Economic Forecasts & Updates > October 2011 Quarterly Update > Quarterly Update

EAST BAY QUARTERLY UPDATE

OCTOBER 2011 EDITION

INTRODUCTION
East Bay EDA is pleased to provide its quarterly economic update for the East Bay, California, and U.S. The report was prepared for East Bay EDA by Dr. Chris Thornberg, Founding Principal, and Jordan Levine, Director of Economic Research, at Beacon Economics.

For PDF versions of this report:

	Economic Outlook, October 2011 (full report)
	East Bay Economy, October 2011
	California Economy, October 2011
	United States Economy, October 2011

EXECUTIVE SUMMARY

EMPLOYMENT

Contrary to proclamations in the popular press, the economic recovery in the U.S., California, and the East Bay continues to gain steam. Although nonfarm employment has posted only modest gains in the third quarter of 2011, the household survey shows that the labor force is expanding and that more residents are finding work. Unemployment rate remains high, but the East Bay is down to its lowest level in over two years. San Francisco and the South Bay continue to lead California’s labor market recovery. Given the commute patterns and reductions in local unemployment, East Bay residents have certainly been taking advantage of that. Several sectors continue to struggle to turn the corner. Most of them are not surprising, such as government and construction, while others like financial activities are less intuitive until you scratch the surface. Overall, the picture is improving. By mid-2012, Beacon Economics is forecasting that the unemployment rate is expected to fall into the single-digits, but it will take time to recover–remaining above 8% until mid-2015. By late 2013, the East Bay will move past the 1 million job mark, though it won’t get back to previous peaks until 2015/16.

CLEAN-TECH

Solyndra’s recent bankruptcy has created much consternation in the media due to the help it received from the federal government. This has led many to raise questions about the viability of clean-tech in the United States. We find that these concerns are largely unfounded and that the performance of one particular firm is not indicative of a sector that is on its way out. In the East Bay in particular, the data shows that clean-tech is gaining steam. Even with respect to solar, the future is bright. The East Bay has attracted a disproportional share of solar investments and some of its larger companies are growing in the region.

CONSUMERS

Consumer spending in the East Bay has bounced back nicely since the end of the recession–growing by more than 13% from trough. Yet, this has not fueled the type of retail employment boost that is traditionally associated with rising consumer spending. There are two main culprits behind this phenomenon. The first is rising efficiency and worker productivity: employers have simply learned to do more with less during the downturn and we see that the amount of sales generated per worker up significantly since 2005. In addition, uncertainty about both the pace of the recovery and if/how Washington will choose to address our longer-term deficit and debt issues has caused employers to be timid in their hiring on the consumer-side.

THE PORT

The Port of Oakland continues to be the leading bright spot in the East Bay economy. Continued real depreciation of the U.S. Dollar has kept American exports in high demand. The strong growth from 2010 has continued into 2011, which has created a sizeable number of new positions in the wholesale trade and transportation/warehousing industries.

HOUSING

Housing in the region is actually healthier now than it has been in many years. Neither the East Bay nor the state overall has yet to see much growth in terms of home prices, but affordability is at an all-time high. Additionally, defaults continue their downward trend signaling that the worst is behind us.

THE CITIES & COUNTIES OF Alameda Antioch Albany Berkeley Brentwood Concord Town of Danville Dublin El Cerrito Emeryville Fremont Hayward Hercules Livermore Martinez Newark Oakland Oakley Piedmont Pinole Pittsburg Pleasant Hill Pleasanton Richmond San Leandro San Ramon Union City Alameda County Contra Costa County

CONTACT This report was prepared by: Scott Peterson Deputy Director (510) 272-6843 East Bay EDA 1221 Oak St., Ste. 555 Oakland. CA 94612 For more information on the East Bay, click on www.eastbayeda.org

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