69% of Bay Area CEOs Predict the Pace of Regional Recovery Will Continue or Accelerate; Only 38% Of Executives Felt This Way 12 Months Ago.

Business Editors

SAN JOSE, Calif.--(BUSINESS WIRE)--May 6, 2004

A large majority (69 percent) of the region's business leaders forecast continued improvement in the Bay Area economy, according to the Bay Area Council's quarterly Business Confidence Survey. Another 25 percent of respondents expect current conditions to remain the same for the next six months. This is a substantial change from one year ago, when in April of 2003 only 38 percent of respondents anticipated any improvement in the local economy. The high expectations of the 511 CEOs and top executives surveyed this quarter kept the Bay Area Business Confidence Index at an elevated level of 64. (An Index reading above 50 means there are more positive than negative responses to four seminal questions in the Survey.)

"The Survey results are good news for Governor Schwarzenegger and California," explained Jim Wunderman, president and CEO of the Bay Area Council. "The Bay Area lost more than 400,000 jobs in the past three years, while California actually added more than 125,000 jobs, clearly making this region the epicenter of the recent recession. An economic recovery in the Bay Area means a much better fiscal picture in Sacramento."

Of the 511 CEOs and senior business executives confidentially surveyed between April 5-22, 2004, 58 percent said Bay Area economic conditions are better now than six months ago. Only nine percent of the respondents report conditions worse than they were six months ago in the Bay Area.

Participants were more circumspect about their own industry. Fifty-four percent predict improvement in their industry in six months (versus 69 percent for the Bay Area).

Lenny Mendonca, a director at McKinsey & Company, the international management-consulting firm that helped develop the Survey, noted, "The elevated business confidence level has yet to translate into robust job growth in the Bay Area. The Workers' Compensation compromise is a key first step, but more policy reform from Sacramento is necessary to reduce the cost of living and doing business in the Bay Area. Given the preliminary state of the recovery, more positive signals that the public sector is serious about reform could have a large impact on business leaders."

Bay Area Business Confidence Survey

The Bay Area Council developed the Bay Area Business Confidence Survey to measure employer expectations of the Bay Area economy. The Spring survey is the eleventh in a series of quarterly measures of business confidence. The next Business Confidence Survey will be conducted and reported during the summer of 2004. Survey findings will be published in an upcoming edition of the Bay Area Economic Pulse and can be accessed from the Business Confidence survey page at www.bayareacouncil.org.

The confidential survey of 511 business executives was conducted April 5-22, 2004, by Evans/McDonough Company Incorporated for the Bay Area Council with the assistance of McKinsey & Company. Participating organizations include: Bay Area Council, Contra Costa Council, Contra Costa Economic Partnership, Economic Development Alliance for Business, Oakland Chamber of Commerce, San Jose Silicon Valley Chamber of Commerce, San Francisco Chamber of Commerce, San Rafael Chamber of Commerce, Santa Rosa Chamber of Commerce, Silicon Valley Manufacturing Group, Solano Economic Development Corporation, and Tri-Valley Business Council. All members in the database were invited to participate through the Internet. The Survey results are weighted to reflect the approximate percentage of employees in each Bay Area County.

A key element of the Bay Area Business Confidence Survey is the Bay Area Business Confidence Index that tracks changes in business executives' confidence over time. The Index value is the average of the percent

of positive or negative responses to four questions: current own industry conditions vs. 6 months ago; expectation for own industry 6 months ahead; current Bay Area economic conditions vs. 6 months ago; and expectations for Bay Area economy 6 months ahead.

Bay Area Council

Founded in 1945, the Bay Area Council (www.bayareacouncil.org) develops and drives regional public policy initiatives and researches critical infrastructure issues. Led by CEOs, the Bay Area Council presents a strong, united voice for more than 275 major employers throughout the Bay Area region in improving economic prosperity and quality of life. Jim Wunderman became President and CEO of the Bay Area Council in 2004.

McKinsey & Company

McKinsey & Company (www.mckinsey.com) is an international management-consulting firm that helps leading corporations and organizations make substantial and lasting improvements in their performance. With approximately 6,000 consultants deployed from eighty-two offices in forty-three countries, McKinsey has expertise on strategic, operational and technological issues.

Evans/McDonough Company Incorporated

Evans/McDonough Company Incorporated (www.evansmcdonough.com) is a full-service opinion research and strategic consulting firm serving a broad range of corporate, political and institutional clients. Founded in 1989, EMC principals have been involved in thousands of public opinion studies, ranging from political and public policy strategy polls to extensive market share and customer satisfaction surveys.