Economists: Bay Area economy will dip in ‘08

The ongoing burst of the real-estate bubble and the resulting climate crunch is ultimately going to spread upward from the subprime market to affect broad consumer spending, with unpleasant implications for the San Francisco-Bay Area econoomy.

Speaking at The Bay Area Economic Forecast Series at the Hyatt Regency San Francisco Wednesday, Beacon Economics economists Christopher Thornberg and Jon Haveman outlined how consumers using home equity have been spending at an unsustainable rate and will have to retrench – creating either a mild downturn or a recession over the course of 2008, with recovery likely for 2009. In either scenario, they predicted a drop in payrolls and a rise in unemployment rates, though the latter should go no higher than 5.5 percent.

The downturn will delay personal income growth and affect local governments because of a drop in taxable sales, Haveman said.

The tourism industry may also feel a hit because of declining spending, or may turn out well, Haveman added: it all depends on whether foreign visitors lured by the cheap dollar come and supplement decreased local spending.

San Francisco’s previous economic bust of 2001 was made sharper by the terrorist attacks of September 11 that affected the tourist industry, but didn’t have a fall in housing prices or a drop in consumer spending, Haveman said. Though Dataquick figures released regularly do not show a drop in home prices,he added, those figures give a misleading figure because they don’t report the types of homes being sold, while prices actually are declining in The City.

Bay Area NewsLocal

If you find our journalism valuable and relevant, please consider joining our Examiner membership program.
Find out more at www.sfexaminer.com/join/

Just Posted

The most dangerous behaviors by drivers include failing to yield right-of-way at crosswalks, unsafe speeding and failing to stop at red lights or stop signs. <ins>(Ekevara Kitpowsong/Special to S.F. Examiner)</ins>
Hetch Hetchy in Yosemite, which supplies water to San Francisco, is among the concerns of the San Francisco Public Utilities Commission, which is undergoing a change of leadership. <ins>(Courtesy SFPUC)</ins>
Changes at SFPUC spark concern, hope

Will agency’s new commissioner continue to support Big Ag?

A screenshot from SFPD body worn camera
New videos show police shooting man armed with knife, frying pan

Police say Antonio Estrada set fire to apartment building before shooting

Dr. Grant Colfax, director of the Department of Public Health, said he expected San Francisco to enter the purple tier within days.
Chris Victorio/Special to S.F. Examiner
SF still in the red but expects move into purple tier ‘some time soon’

Four more counties moved into highest COVID-19 risk category by state

Most Read