On October 12, members and guests of CREW SF gathered for the 2017 Economic Forecast featuring City and County of San Francisco’s Chief Economist Dr. Ted Egan. Freshly back from vacation and armed with an informative set of slides containing data he and his team from the Office of Economic Analysis in the City Controller’s Office have collected over the years, Dr. Egan shared his examination of the results.
To kick-off the presentation, Egan revealed some positive news - San Francisco’s seasonally adjusted unemployment rate has been at or around 3 percent, an historic low, for the last two years. Since 2010, the city’s unemployment rate steadily decreased from 10 percent to 3 percent, where it has held since 2015, and neither a local or national recession is likely to take place in the coming years.
Tech Titans & Housing
As many in the region would expect, San Francisco’s economy is heavily impacted by the Technology industry. In 2016, the city’s job growth continued its torrid pace with an average increase of 26,000 new jobs per year. Nearly every sector added jobs, but none as high as Tech, which has been growing drastically since 2003. 2016 saw the addition of over 9,000 jobs in the Tech space, way beyond the additions of 1,000 jobs in Construction sector; 4,000 jobs each in the Transportation, Trade, Financial and Professional Services sectors; and 2,000 in the Manufacturing sector. The differential in numbers between tech and non-tech industries can be attributed to industry investment. Non-tech companies simply cannot afford such rapid growth. However, even with this growth, the data shows that startup activity has slowed since 2013, meaning fewer startups have been funded in San Francisco since then. An uptick in VC investment indicates that money is going towards larger, later-stage companies.
While the tech boom is not expected to end anytime soon, Dr. Egan theorized that lack of physical space in San Francisco is contributing to the slow-down in startup activity. The absence of vacancy in both housing and office space leave new and existing companies with few options for companies to develop and expand. Recovery in stock prices and venture capital likely contributed to renewed growth in apartment rents this past year, but the office market has yet to see the same rebound. The increase in office jobs without the accumulation of office space tells us that the city is at capacity.
Thank you to all who attended and sponsored this year’s Annual Economic Forecast. See you next year at the 2018 Economic Forecast!