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Bay Area 2020 Economic Forecast: Will the Party Ever Stop?

Feb 5, 2020

EisnerAmper’s San Francisco office hosted its quarterly San Francisco Real Estate Principals Luncheon on January 10. Co-hosted by the Bay Area Council and Kennedy Wilson, this lunch series focuses on bringing industry professionals together to foster relationships, facilitate deal flow, and encourage the exchange of marketplace intelligence and insight. To kick-off 2020, Patrick Kallerman, Research Director of the Bay Area Council Economic Institute, gave a 2020 economic forecast titled: “Will the Party Ever Stop?” to a very engaged audience of real estate leaders.

Kallerman shared some data regarding the Bay Area’s strong economy:

  • Bay Area economic growth continues to be exceptional, making its economy the 18th largest in the world, with a GDP of $838 billion.
  • Although employers are still hiring, Bay Area employment growth has slowed simply because it has reached full employment.
  • In 2015, San Jose grew faster than China in terms of GDP percentage.
  • The Bay Area’s outsized share of employment in technology and related companies continues to drive growth.
  • The Bay Area population is among the most educated on a per capita basis compared to other U.S. cities.
  • The Bay Area receives the highest share of venture capital investment in the nation.

Kallerman shared additional economic and market facts relevant to understanding the Bay Area’s economic outlook, including:

Stock Market Performance

The stock market had a good year, despite all of the economic and geopolitical uncertainties around the globe. With a weak manufacturing sector, U.S. GDP is growing at an annual rate of 2.1% compared to a 4% GDP growth rate in late 2014 and early 2015.

Light Vehicle Sales

This category represents automobiles, light trucks, and equipment needed for manufacturing and construction. The measurement can be a good indicator of consumer confidence and the appetite for investing. Light vehicle sales have started to decline, possibly due to a slowdown in consumer confidence.

Industrial Production

Industry production experienced a slight decline in 2019.

Retail Sector

The continuous growth of consumer spending within the retail sector reflects increased consumer confidence and wage growth.


The U.S. took longer to recover from its most recent recession (the Great Recession of 2007-09) than previous ones, with the employment level taking approximately 120 months to return to what it was pre-recession. This also may be due to structural problems and a lack of retraining. While the unemployment rate has dropped to the pre-recession level, the employment-to-population ratio is still far from having recovered. This may be due to automation and people leaving the labor force.

Global Economy

The U.S. is heavily influenced by the global economy, both emerging and advanced. During 2019, aggregate global GDP dipped slightly. The GDP in 2020 is expected to be flat. If the global economy continues to dip, this will likely weigh down the U.S. economy.

Global Consumer Confidence

Global consumer confidence has been falling over the past 18 months, which is not a good sign for the economy.


There continues to be new workers needed in the Bay Area; however, there’s not enough talent in the market to fill those jobs. This can be partially attributed to talent moving out of the Bay Area due to the high cost of living. We see mega commuters filling a number of these jobs in the Bay Area.

Highly anticipated IPOs, such as Uber, Airbnb, Lyft, Pinterest, are underperforming.

The Bay Area is very dependent on trade. Imports are affected by U.S. tariffs on Chinese goods, and exports are affected by Chinese tariffs on U.S. goods.

There is currently a lack of housing. Expensive housing may lead to companies moving out of the Bay Area or having to pay very high salaries. In fact, Bay Area rental units are among the most expensive in the country. Net domestic migration to and from the Bay Area has turned negative. And the issue of homelessness continues to grow.

The increasing number of daily mega-regional commuters is increasing and unsustainable. As such, the region must invest more in public transit and infrastructure improvements. These will impact California’s challenge to meet its 2030 and 2050 climate goals.

Learn More

The Real Estate Principals Lunch Series—held in both in San Francisco and Los Angeles—will feature a variety of thought leaders throughout the year who will address timey topics that are impacting the real estate industry. It will also give business leaders the opportunity to network with others in their field who are developing solutions to the challenges they face. Learn more about upcoming events here.

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