Encouraging news was definitely not in short supply in the annual economic forecast of the Association of Bay Area Governments, the official regional city/county planning agency. ABAG noted that the 54,100 new jobs the Bay Area added in 2006 were more than one-third greater than predicted in last year’s forecast.
Last Thursday’s 2007-08 ABAG update projected 47,000 new jobs for each of the next two years, accompanied by steady growth in productivity, sales-tax revenue and commercial development. Inflation in the Bay Area is expected to rise less than 3 percent annually and will be outpaced by household incomes that gain 1 percent above price hikes each year.
Commercial occupancy rates rose in San Francisco and San Mateo counties, reversing the dot-com bust’s onset of empty offices. Retail sales growth in The City is projected at more than 7 percent annually and tourism is climbing. San Francisco’s restaurant comeback is particularly strong, with 11.6 percent third-quarter gains between 2004 and 2006.
Meanwhile, San Mateo County is benefiting from a diverse business climate that boosts job and industry growth, as large companies are moving into glossy newer office campuses such as Redwood City’s Pacific Shores Center and Daly City’s Pacific Plaza.
Potential dark clouds on the horizon include uncertainty about gasoline prices, plus the drain on local government budgets from ballooning pension and health coverage obligations. But the major concern undoubtedly is the softening market for housing, with a slowdown in home sales, stagnating prices and a near-freeze of new residential construction.
Still, ABAG remains optimistic that pressures from the housing downturn will not be severe enough to drag down all the positive trends of the Bay Area economy. With consistent local demand preventing a major plunge in home prices, ABAG predicts that sales will turn around by 2008.
Despite all the reasons to be pleased by this revived growth of Bay Area prosperity, the recent roller-coaster years should have shown all of us that a booming regional economy is fragile at best. Success must be nurtured by sensible policies that support the growth of good jobs by encouraging business expansion instead of creating obstacles.
When the great economist Milton Friedman died last November, we suggested The City honor him by naming a street after him. Friedman and his wife, Rose, after all, had adopted San Francisco as their hometown three decades ago when he won the Nobel Prize for Economics. For much of the last century, Friedman’s influence was boundless, as country after country cast off socialist shackles and embraced free-market policies. There is progress to report: Today is Milton Friedman Day, so proclaimed by Gov. Arnold Schwarzenegger and by the Board of Supervisors. At 10 p.m., KQED has scheduled a splendid documentary on Friedman’s life and ideas, "The Power of Choice."