"The Bay Area economy will recover slowly, a mirror of the rest of the nation, stabilizing in 2010 with some recovery in 2011,” said Paul Fassinger, ABAG Economist and Director of Research, during the Association of Bay Area Governments’ (ABAG) 22nd Annual Regional Economic Outlook Conference on Tuesday, January 26, 2010. According to Fassinger, “Incomes are not expected to grow appreciably and the Bay Area inflation rate for 2010 and 2011 will hover at 2.5%.” These projections, which address the state of the Bay Area’s economy for 2010-2011 and other budget concerns challenging local governments, were presented to more than 150 conference attendees representing local government, regional agencies, and business.
Highlights
Focusing on current and future Bay Area economic trends, Fassinger said, “In the short term, the Bay Area will see nominal income growth (0.3%) in 2010, increasing by 2.5% in 2011. Approximately 20,000 more jobs will be lost in 2010, while 2011 will show a modest increase of 8,000 jobs.” Chief Economist Howard Roth of the California Department of Finance provided the broader California outlook, noting “The recession may well be over, but the toll has been horrific. Recovery will likely be slow as unemployed workers try to find jobs and consumers struggle to get their finances in order. A major concern affecting this outlook is that another wave of less-than-prime adjustable-rate mortgages will reset between 2010 and 2012.”
ABAG Senior Regional Planner Hing Wong examined Bay Area retail sales and consumer spending patterns, stating that “consumer spending continues to be weak. Consumers will continue to feel the economic pinch as retail sales are forecasted to grow by only 0.4% in 2010 and 2.2% in 2011. The slowdown in the job market, and the high level of unemployment compounded by California’s ongoing budget issues, have eroded consumer confidence.” As a result, a nominal taxable sales growth of 1% is forecast for 2010, slightly increasing to 1.9% in 2011.
The Bay Area housing outlook was discussed by Andrew LePage, Anaylst, DataQuick Information System. LePage said, “Some indicators suggest the housing downturn has slowed, with potential for a fledgling recovery.” He detailed the California and Bay Area housing market downturns, resales, mortgage defaults, and foreclosure rates. He provided data on California foreclosure inventory by county which showed that Vallejo and Antioch had the highest number of foreclosures in 2009, 1529 and 1455 homes respectively. At the other end of the spectrum, Sausalito and Los Altos show the lowest foreclosure numbers in 2009 of 5 and 8 homes respectively.
ABAG’s conference provides a two-year regional economic outlook at the beginning of each calendar year. It is the foremost regional conference for forecasting local government future revenue and planning budgets and is consistently rated by attendees as one of the most reliable prognostications of Bay Area economic trends.