The Bay Area and California are in for slower job growth this year and next, but the Bay Area, powered by its high-tech economic engine, will outpace the state in job creation, according to two new economic forecasts released Wednesday.
This year and next, the technology sector will add jobs at a brisk clip, propelling the Bay Area employment market and economy at a healthy pace, according to Christopher Thornberg, director of the Center for Economic Forecasting and Development at UC Riverside’s School of Business.
“Tech is hot and will keep pushing the Bay Area forward,” Thornberg said.
In a separate assessment, the UCLA Anderson Forecast predicted that the total number of payroll jobs in California will rise 2.6 percent during 2016, slightly weaker than the 3 percent increase in 2015.
During 2017, California’s job growth will slow further, slipping to 1.6 percent, the Anderson Forecast stated. By 2018, statewide job growth will be even more sluggish, slowing to 1.1 percent for that year.
For 2016, job growth in the Bay Area should top 3 percent and be somewhere around 3.3 percent, Thornberg estimated. In 2017, the Bay Area should post job growth in the “high twos” and should be in the 2.7 percent range.
The U.S. job market should grow by 1.7 percent in 2016, 1.2 percent in 2017 and a mere 1 percent in 2018, the Anderson Forecast predicted.
Despite the anticipated slowdown, the Bay Area will remain perched atop the job-creation ladder, experts said.
“Tech is not in any danger of decline,” Thornberg said. “These tech companies in the Bay Area have plenty of money to keep hiring people.”
Other analysts agreed about the outlook for the region’s tech sector, which is at record levels of employment, even topping the peaks of the dot-com era.
“The Bay Area is marching to its own drumbeat and is going to outperform California,” said Stephen Levy director of the Palo Alto-based Center for Continuing Study of the California Economy.
If a slowdown in hiring emerges, it likely will be driven by global factors such as a weakening of the national and worldwide economies, analysts said.
“It’s not a knock on the tech industry; it isn’t a knock on our competitiveness in the Bay Area,” Levy said. “There will be a slowdown in the Bay Area job market, simply because there will be a slowdown everywhere.”
Wall Street also could play a role in a potential hiring downturn.
“Besides the global situation, you have the crazy swings in the financial markets,” said Thornberg, who also is a principal economist with Beacon Economics.
Personal income in California, adjusted for inflation, should grow by 2.6 percent in 2016, a sharp decrease from a gain of 4.6 percent in 2015, the Anderson forecasters predicted. Personal income, though, is expected to rebound a bit, and should rise 3.7 percent in 2017 and another 3.6 percent in 2018.
Taxable sales in California are expected to undergo a steady weakening, beginning this year, the Anderson Forecast stated.
During 2016, taxable sales, adjusted for inflation, should increase 2 percent in 2016, less than the 2.6 percent gain in 2015. Taxable sales should increase 1.8 percent in 2017 and 1.7 percent in 2018. The sales figures were adjusted for inflation.
The constraints of full employment also could hamper job growth in the Bay Area and California. When an area is at or near full employment, the number of people available to be hired shrinks significantly.
“The Bay Area is already at full employment,” Nickelsburg said. “California should be at full employment within the next few months.”
Full employment has no firm definition, but based on current economic conditions, it typically occurs when the jobless rate is at or below the 4.5 percent to 5 percent range. In August, California posted a 5.5 percent unemployment rate, and jobless rates in the Bay Area were even lower.
“The Bay Area job market is in good shape,” Thornberg said. “We see no reasons for immediate concern.”
Source: The Mercury News