Welcome to the Regional Outook San Francisco, Beacon Economics' quarterly forecast for the San Francisco Metropolitan Statistical Area.  This report delivers a clear snapshot of the current state and future outlook of employment, home prices, consumer spending, personal income, and othe leading indicators in this key region of California.

San Francisco East Bay Los Angeles San Diego Inland Empire     SUBSCRIBE Receive the South Bay Regional Outlook by email

Silicon Valley A Bright Spot In A Grey Economy

The South Bay/Silicon Valley continues to be one of the regions leading California’s economic recovery. This is not surprising due to strong demand for the area’s technology products at the state, national, and international levels. From the second to third quarter of 2011, total nonfarm employment in the South Bay increased by 1% and the unemployment rate decreased by 0.2%. The Professional and Technical Services industry continues to be one of the region’s strongest sectors, in terms of both growth rate (8.4%) and the number of employees being added (8,600 since the low point in September 2009). Other industries that are showing solid growth include Construction, Durable Goods Manufacturing, and Education and Health.

Beacon Economics is forecasting that the South Bay will maintain its upward momentum and continue to outpace the employment recovery in the rest of the state. Total nonfarm employment will reach its pre-recession peak in the second half of 2013. The unemployment rate, which peaked at 11.8% in the fourth quarter of 2009, and is currently at 9.9% for October 2011, will continue to fall and reach 8% by the end of 2013.

 

Home Price Woes?

Beacon Economics is forecasting that the worst of the home price declines are behind the South Bay. Although prices dipped modestly in the first quarter of 2011, that turbulence was the result of the expiring homebuyer tax credit. And although it was a predictable blip, many hailed it as the second wave of the residential meltdown. Yet, when we dig into the data, housing appears more stable than it has been in several years. South Bay home prices have returned to a level that lines up reasonably with incomes in the region, and home sales have increased for the last few quarters. Mortgage defaults and foreclosures remain elevated, but they have been falling consistently.