Economic and Fiscal Update. Ben Rosenfield, Controller Ted Egan, Ph.D., Chief Economist City and County of San Francisco January 23, 2018

Size: px

Start display at page:

Download "Economic and Fiscal Update. Ben Rosenfield, Controller Ted Egan, Ph.D., Chief Economist City and County of San Francisco January 23, 2018"

Beryl Barnett
5 years ago
Views:

1 Economic and Fiscal Update Ben Rosenfield, Controller Ted Egan, Ph.D., Chief Economist City and County of San Francisco January 23, 2018

2 San Francisco Unemployment Rate Continues to Find New Lows Now Down to 2.4%, on a Seasonally-Adjusted Basis 10.0% San Francisco Unemployment Rate, Seasonally-Adjusted, November 2010-November % 8.0% 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% 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 Nov-15 Jan-16 Mar-16 May-16 Jul-16 Sep-16 Nov-16 Jan-17 Mar-17 May-17 Jul-17 Sep-17 Nov-17 2

3 As the Pool of Available Labor Dries Up, Employment Growth Will Inevitably Slow Growth Through June 2017 was Half the Previous Year Annual Change in Total Employment in San Francisco, June 2011-June ,000 30,000 25,000 20,000 15,000 10,000 5,000 0 Jun11-Jun12 Jun12-Jun13 Jun13-Jun14 Jun14-Jun15 Jun15-Jun16 Jun16-Jun17 3

4 Employment Growth Continues, at a Slower Pace, Across Most Sectors Employment Growth Rates, San Francisco Industry Sectors: 2015/16 and 2016/17 Construction Manufacturing Trade, Transportation, Utilities Information Financial Activities Professional & Business Services Education & Health Services Leisure & Hospitality Other Services -5.0% 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 4

5 With Low Unemployment, In-Commuting Becomes More Important. 49% of All SF Jobs Were Held by In-Commuters in ,000 San Francisco Employment by Place of Residence, , , , , , , , SF Resident Non-SF Resident 5

6 According to Zillow, Residential Asking Rents in the City Are 5% off the Peak from 2 Years Ago, While Still Rising Across the State and Nation $5,000 Median Asking Rent: San Francisco, California, and United States: November 2011-November 2017 $4,500 California U.S. SF $4,000 $3,500 $3,000 $2,500 $2,000 $1,500 $1,000 $500 $

7 San Francisco Office Rents Have Similarly Stalled Since Mid-2016 $70.00 Average Effective Office Rent per Square Foot, San Francisco: $60.00 $50.00 $40.00 $30.00 $20.00 $10.00 $ Q1 2013Q2 2013Q3 2013Q4 2014Q1 2014Q2 2014Q3 2014Q4 2015Q1 2015Q2 2015Q3 2015Q4 2016Q1 2016Q2 2016Q3 2016Q4 2017Q1 2017Q2 2017Q3 7

8 December 2017 Joint Report Projections Are Similar to Last Year s Short term fiscal picture similar to one year ago No recession projected. Revenue growth rate slowing; some declines Constraints to growth: housing, transportation Medium to long term concerns Growing employee costs for pension and health Cost shift from state for IHSS (In Home Supportive Services) Growing cost of baselines and set asides Areas of uncertainty and risk Economic cycle: 8.5 year duration of current economic expansion is third longest since 1945 Federal risks: tax reform, Affordable Care Act, and budget 8

9 Revenue Growth in Near Term Tapers Off Near-term growth assumes robust business and property tax returns, and continues weakness in sales, hotel, and parking tax. 9

10 Projected Deficits Are Driven by Expenditure Growth 10

11 Expenditure Growth is Driven by Personnel Costs, Which Have Grown at Twice the Rate of Inflation During the Past Decade In FY 17-18, pension payments accounted for 7% of General Fund expenditures up from 2.5% in FY Major cost drivers include: Past investment performance below target Changes in retiree longevity Supplemental COLAs 11

Central SoMa Area Plan:

Central SoMa Area Plan: Economic Impact Report CITY & COUNTY OF SAN FRANCISCO Office of the Controller Office of Economic Analysis Items #180184 & #180185 07.24.2018 2 Introduction The proposed legislation