San Francisco Economic Update: June 2017 Ted Egan, Ph.D. Chief - PowerPoint PPT Presentation

San Francisco Economic Update: June 2017 Ted Egan, Ph.D. Chief Economist, Controller’s Office June 14 th , 2017

10.0% 12.0% Low as It Has Been Since 1999 San Francisco’s Seasonally-Adjusted Unemployment is Now Below 3%, As City and County of San Francisco Controller's Office ● Office of Economic Analysis 0.0% 2.0% 4.0% 6.0% 8.0% Apr-2010 Jun-2010 Aug-2010 Oct-2010 Dec-2010 Feb-2011 San Francisco Unemployment Rate, April 2010 - April 2017 (Seasonally-Adjusted) Apr-2011 Jun-2011 Aug-2011 Oct-2011 Dec-2011 Feb-2012 Apr-2012 Jun-2012 Aug-2012 Oct-2012 Dec-2012 Feb-2013 Apr-2013 Jun-2013 Aug-2013 Oct-2013 Dec-2013 Feb-2014 Apr-2014 Jun-2014 Aug-2014 Oct-2014 Dec-2014 Feb-2015 Apr-2015 Jun-2015 Aug-2015 Oct-2015 Dec-2015 Source: EDD Feb-2016 Apr-2016 June-2016 Aug-2016 Oct-2016 Dec-2016 Feb-2017 Apr-2017 2

In 2016, San Francisco’s Job Growth Continued its Torrid Pace of Job Growth Wage and Salary Jobs in San Francisco, 2010-2016 800,000 Average 26,000 jobs per year 700,000 600,000 500,000 400,000 300,000 200,000 100,000 0 2010 2011 2012 2013 2014 2015 2016 Controller's Office ● Office of Economic Analysis Source: BLS QCEW 3 City and County of San Francisco

In 2016, Nearly Every Sector of the City’s Economy Continued to Add Jobs San Francisco Employment Change by Industry, 2015 to 2016 Tech Construction Manufacturing Trade, transportation, and utilities Information (non-Tech) Financial activities Professional and business services (non-Tech) Education and health services Leisure and hospitality Other services -1,000 0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 10,000 Controller's Office ● Office of Economic Analysis Source: BLW QCEW 4 City and County of San Francisco

Tech’s Growing Importance in San Francisco’s Labor Market Technology Industry Share of Private Sector Payroll and Employment in San Francisco, 1990-2016 14% 12% 10% 8% 6% 4% 2% 0% 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Controller's Office ● Office of Economic Analysis Source: BLS QCEW 5 City and County of San Francisco

Monthly Growth Rate Data Shows a Notable Slowdown in Tech, and Total, Employment in the San Francisco-San Mateo Metro Division Annual Growth Rate, Tech and Total Employment, San Francisco Metro Division, April 2010-April 2017 30.0% 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% -5.0% Apr-10 Jun-10 Aug-10 Dec-10 Apr-11 Jun-11 Aug-11 Dec-11 Apr-12 Jun-12 Aug-12 Dec-12 Apr-13 Jun-13 Aug-13 Dec-13 Apr-14 Jun-14 Aug-14 Dec-14 Apr-15 Jun-15 Aug-15 Dec-15 Apr-16 Jun-16 Aug-16 Dec-16 Apr-17 Oct-10 Feb-11 Oct-11 Feb-12 Oct-12 Feb-13 Oct-13 Feb-14 Oct-14 Feb-15 Oct-15 Feb-16 Oct-16 Feb-17 Tech job growth rate Private Non-Farm job growth rate Controller's Office ● Office of Economic Analysis Source: EDD 6 City and County of San Francisco

Tech Employment in the Metro Division is Now 5,000 Below Last Year’s Peak Monthly Tech Employment, San Francisco Metro Division, April 2015-April 2017 120,000 115,000 110,000 105,000 100,000 95,000 90,000 Controller's Office ● Office of Economic Analysis Source: EDD 7 City and County of San Francisco

Tech Startup Activity Has Been Slowing Since 2013 Active San Francisco Tech Companies (Founded Since 2001) By Year of Founding 400 350 300 250 200 150 100 50 0 Controller's Office ● Office of Economic Analysis Source: Crunchbase Only companies with more than $1M in funding 8 City and County of San Francisco

NASDAQ and Venture Capital Usually Move Together and Affect Our Tech Employment – But Now Moving in Different Directions Trends in the NASDAQ-100, Bay Area Venture Capital Investment, and San Francisco Metro Division Tech Employment, 2011-17 250 225 200 NASDAQ-100 12ma Bay Area Venture Capital Investment 12ma 175 SF MD Tech Employment 150 125 100 75 50 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2011 2012 2012 2012 2012 2013 2013 2013 2013 2014 2014 2014 2014 2015 2015 2015 2015 2016 2016 2016 2016 2017 Controller's Office ● Office of Economic Analysis Source: EDD; PWCMoneytree; Yahoo! Finance 9 City and County of San Francisco

Trends in Housing Prices and Rents Median Housing Value, and Median Asking Rent, in San Francisco: November 2010 - April 2017 $1,400,000 $5,000 $4,500 $1,200,000 $4,000 $1,000,000 $3,500 Monthly Asking Rent $3,000 $800,000 Home value $2,500 $600,000 $2,000 $1,500 $400,000 $1,000 $200,000 $500 $0 $0 2010-11 2011-01 2011-03 2011-05 2011-07 2011-09 2011-11 2012-01 2012-03 2012-05 2012-07 2012-09 2012-11 2013-01 2013-03 2013-05 2013-07 2013-09 2013-11 2014-01 2014-03 2014-05 2014-07 2014-09 2014-11 2015-01 2015-03 2015-05 2015-07 2015-09 2015-11 2016-01 2016-03 2016-05 2016-07 2016-09 2016-11 2017-01 2017-03 Median Home Value Median Monthly Asking Rent Controller's Office ● Office of Economic Analysis Source: Zillow 10 City and County of San Francisco

Conclusions • Through 2016, San Francisco has continued its unprecedented period of strong employment growth, and unemployment well below “full employment”. • The technology industry has undoubtedly been the primary driver of growth in the city during the decade, and, despite slowing growth, has continued to lead growth through the end of last year. • The slowdown in technology industry employment has been relatively rapid, though not as rapid as the decline in 2001 and 2002, and actual employment losses in the industry have been modest to date. • Additionally, the generally strong macro-economic environment, including renewed strength in the stock market, is probably tied to the slight recovery in venture capital investment in 2017. We should not assume a sudden downturn is imminent. • Nevertheless, given tech’s disproportionate role in the city’s economic story this decade, any prolonged slowdown is likely to have significant effects on the broader local economy. Controller's Office ● Office of Economic Analysis 11 City and County of San Francisco