Bay Area economy forecast for 2008

January 25, 2008 9:57:23 AM PST
It looks as though the Bay Area economy is booming. New towers keep rising and people are shopping. However, economists say for 2008 the reality is "slow growth. Much slower than we've seen."

Paul Fassinger is the economist at the Association of Bay Area Governments, which tracks regional issues for nine counties and 101 cities. He's forecasting job growth will drop to 15,000. That's a 75 percent drop from last year and 2006. The chief reason is the mortgage crisis.

"It's really the home market because there are a lot of unresolved issues out there. We're going to see a lot of the sub-prime real estate loans continue to reset in 2008, and the question is really how big of an impact that's going to have."

A slowdown in home construction will impact job growth and the fate of retail jobs will depend on consumer spending. The state budget deficit could make government jobs vulnerable. The worst news of all -- don't expect your income to grow -- zero growth this year.

Still, the Bay Area may do better than other parts of the country. One reason the Bay Area may weather this year's storm is the region's role in the global economy. Sixty percent of what we make in the Bay Area is exported. Half of that goes to Asia.

"Asia is likely to see pretty good growth. If Asian markets remain relatively healthy, that combined with exchange rates that are working in our favor now should lead to a boost in exports, which would be at least a counterbalancing factor against the slowdown that's happening in other parts of our economy," says Sean Randolpg PhD, J.D., Bay Area Council Economic Institute.

The Bay Area may see a sluggish economy in 2008. Orinda City Council member Amy Worth found that "it was interesting the way they didn't quite say recession."


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