San Francisco Economic and Fiscal Update January 2016 Ben - - PowerPoint PPT Presentation

San Francisco Economic and Fiscal Update January 2016

Ben Rosenfield, Controller Ted Egan, Chief Economist January, 2016

Structure of San Francisco's Economy

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Local-Serving Industries

Insurance Banking HQs Legal Admin / Support Services

Financial & Professional Services

Accounting

Creative Industries

IT Services Consulting Traditional Media Design Software Advertising Internet Media Architecture Film & Music IP Mgt. HighTech Manf.

Experience Industries

Accommodations Restaurants & Nightlife Museums Recreation Performing Arts & Sports

Education Health Social Services Retail Trade Personal Services Real Estate Civic Associations Wholesale Trade Traditional Manufacturing Transportation Construction Waste Management

Communications

Regional, National, and Global Markets

Economic Growth Leads to Growth in the City's Tax Revenues

Growth in These Sectors... ...Leads to Growth in These Revenues Overall Employment, Wages, and Revenues Payroll and Gross Receipts Taxes ($612M); Utility User Tax ($99M) Visitors and Hotel Room Rates Hotel Tax ($400M), Sales Tax ($240M) Population and Per Capita Income Sales Tax, Parking Tax ($87M) Housing and Commercial Real Estate Prices Property ($1.6B) and Transfer Taxes ($340M)

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Through March, San Francisco Employment Has Reached Record Highs: Job Growth Has Consistently Outpaced the Bay Area Since 2004

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300,000 350,000 400,000 450,000 500,000 550,000 600,000 650,000 700,000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 15.0% 15.5% 16.0% 16.5% 17.0% 17.5% 18.0% 18.5%

San Francisco Total Employment, March 2005-2015, With the City's Share of the Bay Area Total

SF Employment SF % of Bay Area Employment

Source: BLS

BLS Data for the City Through March Indicates Continued Employment Growth in Every Sector, Led by Professional Services & Information

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0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% 8.0% 9.0% All Private Sector Construction Manufacturing Trade, Transportation, Utilities Information Financial Activities Professional and Business Services Education and Health Services Leisure and Hospitality Other Services

Employment Growth by Sector in San Francisco, March 2014 to March 2015

Source: BLS

Resident Labor Force and Unemployment Rate Have Levelled Off, Signaling Full Employment in the City, and Increased In-Commuting

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90 95 100 105 110 115 120 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% 8.0% Nov-2012 Dec-2012 Jan-2013 Feb-2013 Mar-2013 Apr-2013 May-2013 Jun-2013 Jul-2013 Aug-2013 Sep-2013 Oct-2013 Nov-2013 Dec-2013 Jan-2014 Feb-2014 Mar-2014 Apr-2014 May-2014 Jun-2014 Jul-2014 Aug-2014 Sep-2014 Oct-2014 Nov-2014 Dec-2014 Jan-2015 Feb-2015 Mar-2015 Apr-2015 May-2015 Jun-2015 Jul-2015 Aug-2015 Sep-2015 Oct-2015 Nov-2015 Labor Force & Employment Index (Nov. 2010 = 100) Unemployment Rate

SF Unemployment, Resident Labor Force, And Metro Division Total Employment, Nov. 2010 - Nov. 2015 (all seasonally-adjusted)

Unemploment Rate Resident Labor Force Total Employment

From May-November 2015:

• No change in the

city's unemployment rate

• 1.4% annualized

growth in the labor force

• 4.4% annualized

growth in employment in the Metro Division (SF and San Mateo counties).

Source: EDD

The Latest Regional Data (Including San Mateo County) Through October Shows the Largest Tech Sector Growing at Over 15% Per Year

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0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% Jul-10 Sep-10 Nov-10 Jan-11 Mar-11 May-11 Jul-11 Sep-11 Nov-11 Jan-12 Mar-12 May-12 Jul-12 Sep-12 Nov-12 Jan-13 Mar-13 May-13 Jul-13 Sep-13 Nov-13 Jan-14 Mar-14 May-14 Jul-14 Sep-14 Nov-14 Jan-15 Mar-15 May-15 Jul-15 Sep-15

Annual Employment Growth Rate, Total and Computer Systems Design Employment, San Francisco Metro Division, July 2010-October 2015

Total SF Employment Computer Systems Design Employment

Source: EDD

Tech's Role in Driving the Economy: NASDAQ Has Closely Tracked the City's Business Tax Base, and Predicted Downturns

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500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500 5,000 $0 $10 $20 $30 $40 $50 $60 1991Q03 1992Q02 1993Q01 1993Q04 1994Q03 1995Q02 1996Q01 1996Q04 1997Q03 1998Q02 1999Q01 1999Q04 2000Q03 2001Q02 2002Q01 2002Q04 2003Q03 2004Q02 2005Q01 2005Q04 2006Q03 2007Q02 2008Q01 2008Q04 2009Q03 2010Q02 2011Q01 2011Q04 2012Q03 2013Q02 2014Q01 2014Q04 2015Q03 NDX-100 Private Sector Total Wages ($ Billion)

Total Private Wages in San Francisco, with Predictions Based on the NASDAQ-100, 1990-2015

NASDAQ 100 Index, 4Qma Total Wages, 4Q Predicted Total Wages, 4Q

Source: BLS, Yahoo! Finance

Things to Consider: Three Factors Affecting Continued Growth

• The U.S. Economy – Risk is relatively low for 2016, but global factors are a concern.

– Blue Chip GDP forecasts for 2016 range from 2.2 - 2.9%. – U.S. unemployment now 5.0% - wages now rising nationally at a 2.3% rate - with virtually no inflation. – 211,000 jobs added in November - Fed has begun raising interest rates. – China, impact of a rising dollar are potential risks that may slow interest rate movement.

• Local Tech Sector – Risk is Rising.

– Unprofitable companies employ many if not most tech employees. – A weakening investment climate could slow and eventually reverse the pace of hiring.

• Local Infrastructure Constraints – Will lead to a levelling-off even without a downturn in

the tech sector or the broader economy.

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