San Mateo County Economy Showing Solid Recovery from Recession with Growth Predicted in Key Sectors

Comprehensive Study of San Mateo County Economy Shows the Path Ahead

SAN MATEO, Calif. – High-paying jobs in finance, science and health care will dominate San Mateo County’s recovery as job losses in all sectors have leveled off, according to a detailed economic forecast released Monday.

Other signs the San Mateo County economy has bounced back from the recession include an improving real estate market and a revival in consumer spending, according to the forecast by Beacon Economics commissioned by the San Mateo County Economic Development Association (SAMCEDA) and the Economic Vitality Research and Education Foundation.

“So what is in the cards for the County of San Mateo moving forward? The recession is clearly over, and positive indicators are either already appearing in available data or are on the near horizon,” according to the report.

Among the positive signs are the rebounding finance and insurance sectors, two major components of the county’s economy: “Having weathered the financial meltdown of 2008, banks, investment funds, venture capitalists, and others are eager to reestablish their foothold in the economy. And, with reviving confidence in the stability of the markets, firms will see their businesses expand.”

The report was prepared by a team led by Jon Haveman, a Beacon founding partner. Beacon presented the report at SAMCEDA’s 58th annual meeting of business, government and civic leaders from across the Peninsula.

The report will serve as a foundation for SAMCEDA’s efforts to work with business, workforce development partners, local governments, nonprofits, labor groups and educational institutions to attract and retain key industries, said Rosanne Foust, president and CEO of SAMCEDA.

“We needed a credible source of data to help us chart the path ahead,” Foust said. “What this clearly shows is that San Mateo County is a hidden gem with a diversity of industries not seen elsewhere. In addition, we have access to venture capital at Menlo Park’s Sand Hill Road, we have access to the world at San Francisco International Airport and we have access to leading educational institutions.”

Those include Stanford University, San Mateo County Community College District campuses San Mateo, Skyline and Canada, the University of California, Berkeley Extension and Notre Dame de Namur in Belmont, among others.

Over the course of the recession San Mateo County suffered significant job losses and home price depreciation. But the county fared better than much of the rest of the state, according to the report. For instance, home prices declined by 27 percent from peak to trough, whereas home prices in much of the rest of the state have fallen by more than 50 percent. Unemployment more than doubled during the recession but remains among the lowest levels in the state.

Going forward, the report predicts a “solid” outlook for job growth in San Mateo County. Local employment is expected to increase by more than 11 percent between the end of 2009 and the end of 2015. Still, those job gains will do little more than erase the losses accumulated over the past two years, and employment will still be below the peak levels attained during the dot-com bubble in 2000.

Key report findings include:

  • The long-term future for California’s economy is bright: California is still a major growth engine in the U.S. economy, a larger percentage of residents have higher education relative to the nation and the state has seen consistently stronger income and population growth.
  • Although the rebound in real estate is largely a result of the first-time homebuyer’s tax credit and people taking advantage of good deals, home prices are expected to rise over the next few years and surpass the 2007 peak by late 2015.
  • As confidence in the economy is restored, consumer spending is expected to rise and surpass the 2007 peak in late 2014 and the all-time 2001 peak the following year.
  • Commercial real estate will see “some continued pain” as building permits for commercial structures will continue to decline on a quarterly basis through this year. Commercial real estate is one of the most lagging indicators following a recession.
  • Local governments’ budgets will continue to see strain in the coming years due to the recession and continued pocket-picking by the state.

The national, state and local economies still face the possibility the recovery could stall as federal stimulus money and programs are curtailed, the report warns. “Although the worst is certainly behind us, and although 2010 will likely be solid years economically, the years beyond present the potential pitfalls of a double-dip recession, inflation and higher taxes, as the recessionary policies crucial to stabilizing the economy are unwound,” the report says.

Still, overall economic indicators are all pointed favorably, especially the predicted job growth in areas such as the sciences, law and skilled health care. “With average wages in each of these categories in excess of $80,000,” the report states, “living standards in the county will rise more quickly in San Mateo than in much of the rest of the state.”