San Francisco Economic and Fiscal Update January 2016 Ben - PowerPoint PPT Presentation

San Francisco Economic and Fiscal Update January 2016 Ben Rosenfield, Controller Ted Egan, Chief Economist January, 2016

Structure of San Francisco's Economy Regional, National, and Global Markets Consulting Creative IT Software Services Industries Internet Media Design IP HighTech Mgt. Advertising Manf. Financial & Recreation Experience Architecture Film & Insurance Professional Music Industries Traditional Performing Services Media Banking Legal Arts & Sports Museums Accounting Restaurants Admin / HQs & Nightlife Support Accommodations Services Wholesale Education Retail Trade Construction Local-Serving Industries Trade Personal Traditional Waste Civic Health Services Manufacturing Management Associations Social Real Estate Transportation Communications Services Controller's Office ● City and County of San Francisco 2

Economic Growth Leads to Growth in the City's Tax Revenues Growth in These Sectors... ...Leads to Growth in These Revenues Overall Employment, Wages, and Revenues Payroll and Gross Receipts Taxes ($612M); Utility User Tax ($99M) Visitors and Hotel Room Rates Hotel Tax ($400M), Sales Tax ($240M) Population and Per Capita Income Sales Tax, Parking Tax ($87M) Housing and Commercial Real Estate Prices Property ($1.6B) and Transfer Taxes ($340M) Controller's Office ● City and County of San Francisco 3

Through March, San Francisco Employment Has Reached Record Highs: Job Growth Has Consistently Outpaced the Bay Area Since 2004 San Francisco Total Employment, March 2005-2015, With the City's Share of the Bay Area Total 700,000 18.5% 650,000 SF Employment 18.0% SF % of Bay Area Employment 600,000 17.5% 550,000 17.0% 500,000 16.5% 450,000 16.0% 400,000 15.5% 350,000 300,000 15.0% 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Controller's Office ● City and County of San Francisco Source: BLS 4

BLS Data for the City Through March Indicates Continued Employment Growth in Every Sector, Led by Professional Services & Information Employment Growth by Sector in San Francisco, March 2014 to March 2015 All Private Sector Construction Manufacturing Trade, Transportation, Utilities Information Financial Activities Professional and Business Services Education and Health Services Leisure and Hospitality Other Services 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% 8.0% 9.0% Controller's Office ● City and County of San Francisco Source: BLS 5

Resident Labor Force and Unemployment Rate Have Levelled Off, Signaling Full Employment in the City, and Increased In-Commuting 8.0% 120 SF Unemployment, Resident Labor Force, And Metro Division Total Employment, Nov. 2010 - Nov. 2015 From May-November (all seasonally-adjusted) 2015: 7.0% Unemploment Rate 115 • No change in the Resident Labor Force city's unemployment Total Employment 6.0% Labor Force & Employment Index (Nov. 2010 = 100) rate 110 • 1.4% annualized 5.0% Unemployment Rate growth in the labor force 4.0% 105 • 4.4% annualized growth in 3.0% employment in the 100 Metro Division (SF and San Mateo 2.0% counties). 95 1.0% 0.0% 90 Nov-2012 Dec-2012 Jan-2013 Feb-2013 Mar-2013 Apr-2013 May-2013 Jun-2013 Jul-2013 Aug-2013 Sep-2013 Oct-2013 Nov-2013 Dec-2013 Jan-2014 Feb-2014 Mar-2014 Apr-2014 May-2014 Jun-2014 Jul-2014 Aug-2014 Sep-2014 Oct-2014 Nov-2014 Dec-2014 Jan-2015 Feb-2015 Mar-2015 Apr-2015 May-2015 Jun-2015 Jul-2015 Aug-2015 Sep-2015 Oct-2015 Nov-2015 Controller's Office ● City and County of San Francisco Source: EDD 6

The Latest Regional Data (Including San Mateo County) Through October Shows the Largest Tech Sector Growing at Over 15% Per Year Annual Employment Growth Rate, Total and Computer Systems Design Employment, San Francisco Metro Division, July 2010-October 2015 30.0% Total SF Employment Computer Systems Design Employment 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% Jul-10 Sep-10 Nov-10 Jan-11 Mar-11 May-11 Jul-11 Sep-11 Nov-11 Jan-12 Mar-12 May-12 Jul-12 Sep-12 Nov-12 Jan-13 Mar-13 May-13 Jul-13 Sep-13 Nov-13 Jan-14 Mar-14 May-14 Jul-14 Sep-14 Nov-14 Jan-15 Mar-15 May-15 Jul-15 Sep-15 Controller's Office ● City and County of San Francisco Source: EDD 7

Tech's Role in Driving the Economy: NASDAQ Has Closely Tracked the City's Business Tax Base, and Predicted Downturns $60 5,000 Total Private Wages in San Francisco, with Predictions Based on the NASDAQ-100, 1990-2015 4,500 $50 4,000 3,500 NASDAQ 100 Index, 4Qma $40 Private Sector Total Wages ($ Billion) Total Wages, 4Q Predicted Total Wages, 4Q 3,000 NDX-100 $30 2,500 2,000 $20 1,500 1,000 $10 500 $0 0 1991Q03 1992Q02 1993Q01 1993Q04 1994Q03 1995Q02 1996Q01 1996Q04 1997Q03 1998Q02 1999Q01 1999Q04 2000Q03 2001Q02 2002Q01 2002Q04 2003Q03 2004Q02 2005Q01 2005Q04 2006Q03 2007Q02 2008Q01 2008Q04 2009Q03 2010Q02 2011Q01 2011Q04 2012Q03 2013Q02 2014Q01 2014Q04 2015Q03 Controller's Office ● City and County of San Francisco Source: BLS, Yahoo! Finance 8

Things to Consider: Three Factors Affecting Continued Growth • The U.S. Economy – Risk is relatively low for 2016, but global factors are a concern. – Blue Chip GDP forecasts for 2016 range from 2.2 - 2.9%. – U.S. unemployment now 5.0% - wages now rising nationally at a 2.3% rate - with virtually no inflation. – 211,000 jobs added in November - Fed has begun raising interest rates. – China, impact of a rising dollar are potential risks that may slow interest rate movement. • Local Tech Sector – Risk is Rising. – Unprofitable companies employ many if not most tech employees. – A weakening investment climate could slow and eventually reverse the pace of hiring. • Local Infrastructure Constraints – Will lead to a levelling-off even without a downturn in the tech sector or the broader economy. Controller's Office ● City and County of San Francisco 9