The Northern California economy is expected to show moderate growth next year supported by its strong high-tech sector and improving property markets. Payroll employment recorded its lowest year-over-year growth since 2011Q2, at 1.8 percent in 2013Q3, still slightly above the U.S. national job growth average of 1.7 percent. The unemployment rate ticked up to 6.6 percent in 2013Q3 even with a 2.0 percent decline in the labor force for the region. This was well below the U.S. unemployment rate of 7.3 percent for 2013Q3.
In September, California lawmakers approved a minimum wage bill, Assembly Bill 10, which will increase the minimum wage incrementally from its current $8/hour to $10/hour by January 2016. Originally introduced in 2012, the passage of AB10 is a precursor to the national debate to take place in 2014 regarding the federal minimum wage. The minimum wage increase adds to already high operating costs for California businesses and may be a drag on California job growth.
The outlook for metro area consumer spending is solid for next year. The positive wealth effect from increased homeowners’ home equity and a steady income growth will be a boost to retail sales in the region heading into 2014. Income advanced 3.5 percent from a year ago in 2013Q2 while home prices surged, growing 17.1 percent from a year ago in 2013Q3.
California technology and social media companies continue to make financial headlines. San Francisco based Twitter entered the world of IPOs in November. The initial public offering was for 70 million shares priced at $26 a share. Twitter raised $1.82 billion as it debut on the NYSE on November 7. The price per share has nearly doubled over the past month, generating considerable wealth for a select group of Northern Californians.
Click here for the complete Northern California Regional Economic Update: NorthernCA 2013Q3