Bay Area Economy Still Growing, Unemployment Remains Low: Military Base Conversion Provides Opportunities.

SAN FRANCISCO--(BUSINESS WIRE)--Sept. 23, 1998--The Bay Area economy continued its strong performance through the second quarter of 1998 despite the spread of the Asian financial crisis. The Bay Area added 96,000 new non-farm jobs for the year ending in June, resulting in an annual growth rate of slightly more than 3 percent. As a result, unemployment for the nine-county Bay Area remained unchanged from the first quarter of 1998 at 3.5 percent.

The Bay Area Economic Pulse, in its Fall 1998 issue, reports that the Bay Area unemployment rate is well below the 5.7 percent rate for California and the 4.5 percent rate for the U.S. June 1998 marked the 30th consecutive month in which the Bay Area unemployment rate was below 5 percent and the 16th consecutive month in which it was below 4 percent. The annual growth rate of roughly 3 percent for non-farm jobs represents a modest slowdown compared to previous periods. The number of Bay Area non-farm jobs expanded by 3.6 percent in 1995, 3.3 percent in 1996 and 4.5 percent in 1997.

Sunne Wright McPeak, President and CEO of the Bay Area Council, stated that, "The Bay Area has continued to host the most vibrant regional economy in the U.S. This is despite the financial turmoil in Asia and the sharp slowdown in the semiconductor and related industries. And, although we are closely watching global economic events, it appears that the Bay Area's comparative economic advantage is evident in this era of increased competition and diminished Asian exports."

Reflecting the overall drop in U.S. exports, merchandise exports from the San Francisco Customs District (which encompasses an area east to Reno) fell 4.4 percent in the second quarter of 1998 compared to the first quarter and 8.2 percent compared to the same period one year ago.

One of the manifestations of the region's strong economy is the continued increase in housing prices. The median price for a home in San Francisco and Santa Clara counties climbed to $315,000 in June, 8.8 percent higher than in March, and 15.2 percent higher than in June, 1997. This is largely due to the Bay Area's pronounced jobs-housing imbalance, in which the region's continued employment and population boom has been providing a seemingly inexhaustible pool of workers willing and able to pay high prices for a home.

In the second quarter of 1998, construction of new housing for the region reached almost 8,000, while non-farm jobs grew by nearly 43,000. Recent anecdotal information, however, may suggest that demand for new housing is starting to soften.

In a related article, the Bay Area Economic Pulse analyzes how the Bay Area's seven closed and six closing military bases present both formidable challenges and significant opportunities for the region's economy. The Bay Area has been disproportionately affected by military base closures, with the 13 affected bases accounting for more than 45,000 military and civilian jobs lost. The loss of the 20,000 civilian base jobs alone represents 28 percent of U.S. civilian job losses from military base closures. Local agencies have identified business opportunities for the former bases that can leverage the region's competitive advantage in select industries, including health care, environmental technology, multimedia, and film production.

R. Sean Randolph, President, Bay Area Economic Forum and a co-author of the article along with Deanna Geddie, Program Operations Manager, Bay Area Defense Conversion Action Team, stated that, "These bases, which encompass some 11,000 acres, can also serve as models for sustainable development and anchors for enhanced water transit service. However, before we can fully exploit such opportunities, these bases still need infrastructure upgrades, streamlined leasing arrangements, and funds for additional environmental cleanup."

The Bay Area Economic Pulse is a publication of the Bay Area Council in cooperation with the Bay Area Economic Forum and the Association of Bay Area Governments. The Bay Area Council is a CEO-led public policy organization founded more than 50 years ago to promote regional economic prosperity and quality of life. The Council presents a strong, united voice for more than 200 major employers from throughout the region to help shape public policy affecting transportation, environmental quality, economic development, housing and land use, sustainable development, water policy, education and workforce preparation, and telecommunications infrastructure.