The South Bay to Recover. The East Bay…Not So Much.

There is an interesting article in the Oakland Tribune today about the differences between the South Bay and East Bay economies. While the South Bay has technology, the East Bay became far too reliant on construction and real estate during the boom.

From The Oakland Tribune:

The current economic boom will be robust enough for the South Bay to recover the jobs it lost during the recession by 2014 — but the East Bay and the San Francisco metro regions might need until at least 2015, the chief economist with the Bay Area Council Economic Institute said Wednesday.

“Every industry in the South Bay is growing except for construction and retail,” said Jon Haveman. “The East Bay is very much hurting, and it may continue to do so for a while.”

…

One big reason for the differing paces of recovery is that the East Bay tumbled into a much deeper economic abyss, an analysis of state Employment Development Department figures shows.

Since payroll employment peaked in the East Bay in August 2007, it has lost about 105,000 jobs. In contrast, the South Bay’s employment peak came in March 2008, and it has since lost about 38,000 jobs. The San Francisco-San Mateo-Marin region peaked in July 2008, and since then has shed 47,000 jobs.

The East Bay remains 10.2 percent below its peak employment levels, while the San Francisco area is down 5.5 percent and the South Bay is down 4.5 percent. California overall is down 6.7 percent.

“The South Bay will come through this like a champ and get back to the peak pretty quick,” said Brad Kemp, an economist with Beacon Economics. “The San Francisco area is close behind. The East Bay has had almost no recovery whatsoever.”

…

The East Bay depended heavily on residential construction and an upswing in the mortgage industry to fuel its employment growth a few years ago. The housing meltdown most likely erased those jobs permanently.

I’m generally skeptical of economic forecasts, but in general it does make sense for the South Bay to see unemployment drop faster than the East Bay. To me, these are both micro-markets of the whole Bay Area – so many people live in one zone and work in another that I don’t think any of this amounts to much. I do doubt very much that either area will “recover” all job losses by 2014 or 2015.

And, employment and where home prices go from here are two very different discussions…