Downturn looms in rosy Bay Areaeconomic outlook 

The Bay Area has recovered its economic health since the bust of the decade’s early years, but the region faces a backslide if some basic "Achilles’ heels" are not addressed, a leading economic analyst said.

"Things are looking pretty good right now, but you can’t pause on that for more than a second," said R. Sean Randolph, Bay Area Economic Forum president and chief executive officer, at a recent editorial board meeting with The Examiner.

The head of the think tank that regularly charts the health of the regional economy indicated that since the failure of the dot-com economy at the beginning of this decade, the region’s gross economic product grew to $352 billion by 2005, an estimated $17 billion higher than the peak of the dot-com bubble. He estimated the number at an even $400 billion for 2006.

Randolph laid much of the credit with the Bay Area’s research institutions, which he said draw enterprising minds to the region and foster ingenuity.

But the prospect of a downturn looms. Randolph identified three factors that could hinder the Bay Area’s economic growth: education, infrastructure and the cost of living.

Education provides the training for the region’s work force, including the skilled technician jobs that are in high demand locally.

"[If] we’re not educating our own, and especially if we’re making it harder for people from other countries to get through our immigration system to work here, that actually puts pressure on companies to move more of their things offshore," Randolph said.

Infrastructure allows the economy to move, Randolph said. Historically, California cities and counties invested 2.5 percent of their revenue on infrastructure improvements, Randolph said, but over the last 20 or so years, that number has fallen to an average of 1 percent.

Finally, the Bay Area’s prohibitively high housingcost makes it difficult for the region to support the lower- and middle-class technicians and service workers on whom the economy depends.

amartin@examiner.com

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