Citys Economy Prepared by: Office of Economic Analysis, Controllers - - PowerPoint PPT Presentation

City’s Economy

Prepared by: Office of Economic Analysis, Controller’s Office

WISF Meeting

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October 2013

The Unemployment Rate Has Been Falling Because We Have Been Adding Jobs

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San Francisco Labor Force vs. Unemployment Rate: 2007-2012

Source: CA Employment Development Department

0% 2% 4% 6% 8% 10% 12% 410,000 420,000 430,000 440,000 450,000 460,000 470,000 480,000 490,000 2007 2008 2009 2010 2011 2012 Unemployment Rate Labor Force Labor Force Unemployment Rate

Private Sector Employment has Recovered to Pre-Recession Levels

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420,000 430,000 440,000 450,000 460,000 470,000 480,000 490,000 500,000 2007 2008 2009 2010 2011 2012

San Francisco Private Sector Employment: 2007-2012

Source: Bureau of Labor Statistics

San Francisco is the Fastest Growing Large County in the United States

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6.1% 5.3% 5.2% 5.1% 4.8% 4.5% 4.5% 4.4% 4.3% 4.2% 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% San Francisco Austin Suburban Dallas Suburban Grand Rapids San Mateo Houston Santa Clara Alameda Suburban Detroit Nashville

Annual Private Sector Employment Growth Rate, 2011-12: Ten Fastest Growing U.S. Counties with > 250,000 Employees

Source: Bureau of Labor Statistics

Every Sector in the City's Economy is Outpacing the US Growth Rate

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Employment Growth Rate, 2011-12: San Francisco Sectors and the U.S. Average

Source: Bureau of Labor Statistics

1.9% 2.6% 3.7% 4.0% 5.0% 5.3% 8.4% 8.7% 8.8% 12.1% 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% United States all industries Financial activities Education and health services Trade, transportation, and utilities Leisure and hospitality Manufacturing Construction Other services Professional and business services Information

Over 25% of Jobs Added Last Year Came from the Tech Sector

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Jobs Added, 2011-12: Tech Sector vs. All Other Sectors

Source: Bureau of Labor Statistics Note: Tech Sector is defined as three major IT Service Industries which include Computer Systems Design (NAICS 5415), Internet Publishing (NAICS 51913), Software Publishing (NAICS 5112)

Tech Sector 7,701 All Other Sectors 28,722

San Francisco Added Nearly Twice as Many Tech Jobs as Santa Clara County

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1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 San Francisco San Mateo County Santa Clara County Computer Systems Design (NAICS 5415) Internet Publishing (NAICS 51913) Software Publishing (NAICS 5112)

Absolute Employment Change, Three Major IT Service Industries: San Francisco, San Mateo, and Santa Clara Counties, 2011-12

Source: Bureau of Labor Statistics

SF Housing is the Highest Priced, and also among the Fastest-Appreciating

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Philadelphia Atlanta Houston Austin Chicago Portland San Jose Boston Seattle Washington San Diego Los Angeles New York Honolulu Oakland San Francisco $0 $100,000 $200,000 $300,000 $400,000 $500,000 $600,000 $700,000 $800,000 $900,000 0% 5% 10% 15% 20% 25% 30% Median Home Value Housing Appreciation, 2011-12

Median Housing Value and Housing Appreciation, 2011-12: San Francisco and Fifteen Other U.S. Cities

Source: Zillow

Rent Control Somewhat Moderates the Impact of Rising Values on the Economy

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Annual Growth in Asking Rents, Allowable Rent Increases Under Rent Control, and Median Rent Paid by all Tenants, 2011-12

Source: RealFacts, SF Rent Board, U.S. Census Bureau 12.9% 1.9% 7.2% Average Asking Rent Allowable Rent Increase under Rent Control Median Rent Paid

Wages Growing More Slowly Than Rent for Most Sectors of the Economy

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Source: Bureau of Labor Statistics

Percentage Change in Average Annual Earnings in San Francisco by Sector, 2011-12

• 5.0%

0.0% 5.0% 10.0% 15.0% 20.0%

Stock Prices Don’t Suggest a Tech Bubble At This Point

11 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500 5,000 5,500 6,000 50 100 150 200 250 300 350 400 450 500 550 600 Jan-95 Aug-95 Mar-96 Oct-96 May-97 Dec-97 Jul-98 Feb-99 Sep-99 Apr-00 Nov-00 Jun-01 Jan-02 Aug-02 Mar-03 Oct-03 May-04 Dec-04 Jul-05 Feb-06 Sep-06 Apr-07 Nov-07 Jun-08 Jan-09 Aug-09 Mar-10 Oct-10 May-11 Dec-11 Jul-12 Feb-13 Sep-13

NASDAQ Composite Index (Price) P/E Ratio (ttm)

NASDAQ Composite Index: Historical Valuation

P/E Ratio NASDAQ Composite Index (Price)

Source: Bloomberg

However There Are Reasons for Concern In the Local Economy

 Some area tech companies have price-earnings ratios

that are reminiscent of the dot-com bubble.

 If this becomes a broader trend in technology, this would

be clearer sign of a bubble.

 Technology has historically been a highly cyclical

industry; the greater the run-up, the more dramatic the decline.

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Conclusion

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 The City recovered the jobs it lost during the recession  The recovery has been largely driven by employment in

the Technology Sector

 Demand for housing has driven up housing and rental

prices.

 Wages in most sectors have not kept up with housing

costs

 No sign of a technology bubble yet in the broad NASDAQ.  However, there are reasons for concern in the local Tech

Sector.