Scott Anderson, chief economist of San Francisco-based Bank of the West, sees a rosy future for the Bay Area economy. But he sees a bit of the bloom coming off that rose from economic headwinds caused by higher taxes and financial uncertainty over the federal government's spending, taxing and debt picture.
In Anderson's view, the remarkable boom in Silicon Valley remains front and center in driving the Bay Area economy. However, he sees more industries are stepping up to join tech to fuel the region's economic engine.
Anderson recently shared his outlook for the region's economy in an interview with this newspaper. His comments have been edited for length and clarity.
Q What is your assessment of the Bay Area economy?
A The Bay Area is a growth and innovation leader for the state of California and for the nation. That will continue in 2013.
Q Will the pace for job creation continue at the 3-plus percent growth rate for the Bay Area that we saw in 2012?
A Job creation could slow a little bit. We had scorching job growth in the Bay Area in 2012, primarily in the South Bay and San Francisco. It was more than 3 percent. That could slip a little bit in 2013. But the Bay Area's growth will still knock it out of the park compared to California and the nation.
Q What are your job growth forecasts for 2013 and how do they compare to what happened in 2012?
A The South Bay job market grew by 3.2 percent
Q What are the primary worries that you have about the economy in the Bay Area?
A The big concerns are the first half of 2013 and the impact from higher taxes, Obamacare, state and local tax increases -- a lot of things will hit the consumer in terms of consumption. If there are federal government spending cuts, that could cause problems for the state government. There could be some big budget cuts for the defense industry, which has a big multiplier effect.
Q What are the primary industries that are strong right now in the Bay Area?
A Technology is strong, of course. We also have much stronger growth in professional and business services, leisure and hospitality, and construction.
Q How far has the Bay Area job market come from the recession?
A The unemployment rates in the Bay Area are well below the national average. The San Francisco metro area is still the lowest in the state. We are getting back to pre-recession levels on the unemployment rate. This is a testament to the strength of the labor market here.
Q What is your view about the South Bay economy?
A Silicon Valley will definitely remain a major job creator and driver of the Bay Area economy overall.
Q Which South Bay industries will have the best job growth?
A You will see the South Bay tech sector staying strong. Professional and business services, education, health care, leisure and hospitality -- they will add a lot of jobs. The South Bay will see some of the strongest construction industry job gains in the region. Internet service providers, Web portals, data and telecom companies and semiconductor companies will be very strong in the South Bay.
Q How does the East Bay economy look to you?
A The East Bay is starting to see moderate job growth. It is somewhat better than the state. But the East Bay is in third place among the major Bay Area metros, the South Bay and San Francisco.
Q What are the industry trends in the East Bay?
A Manufacturing is a particular weak spot in the East Bay. Manufacturing job losses are happening on a sustained basis. Financial services are still weak. In the aftermath of the housing bubble, banks and finance companies are still focused on cost cutting.
Q How does the housing market appear to you?
A The housing market is back in a big way. This momentum is sustainable for housing, even if job growth slows down. There is very little inventory and some of the price gains are eye-popping.
Contact George Avalos at 408-373-3556 or 925-977-8477. Follow him at Twitter.com/george_avalos.
Birthplace: Lake Placid, N.Y.
Company: Bank of the West
Position: Chief economist
Residence: Walnut Creek
FIVE THINGS TO KNOW about Scott Anderson
1. Favorite pastime: Accompanying his daughter Vanessa's piano playing with his saxophone
2. Favorite pastime: Fishing in northern Minnesota with his son William
3. Bucket List item #1: Seeing the French Open tennis tournament
4. Bucket List item #2: Attending the Davos economic summit
5. Bucket List item #3: Learning to sail in San Francisco Bay