Recovery could vary greatly in Bay Area

Compared to U.S., Silicon Valley will have a milder downturn, but East Bay likely will be harder hit

SAN JOSE >> An economic contraction looms for the Bay Area, but the downturn in parts of the region will be less severe than what’s anticipated for the United States, according to a new report released Wednesday.

The expected slump for the April-throughJune second quarter is expected to be milder in Silicon Valley than the nationwide economic nosedive, but the East Bay is predicted to take a steeper plunge than the U.S., a forecast by Massachusetts-based StratoDem Analytics shows.

“All of the latest economic data flowing into StratoDem Analytics makes it crystal clear: The US entered a sharp recession in March 2020,” the data science firm stated in its economic survey.

The digital products and services created by Silicon Valley have enabled the region’s tech titans to operate with virtual workforces, putting the valley in a better position to withstand the economic storms that are believed to have already descended on the world.

The nation’s economic output, officially known as the gross domestic product, or GDP, is expected to shrink by a jaw-dropping 18.1 percent during the second quarter, StratoDem said, citing a consensus of analysts and economists.

StratoDem used the nationwide economic assessment to produce microeconomic prognostications for several counties in the Bay Area.

Alameda County’s economy is expected to crater with a 20.9 percent decline in the second quarter. Economic loss during those three months: $7.9 billion.

Contra Costa County is facing a second-quarter nosedive of 20.5 percent for its economy. The loss in that quarter is expected to total $4.5 billion.

San Francisco’s economy will tumble 13.7 percent with an economic loss of $6.6 billion in the April-June quarter.

San Mateo County will suffer a 13.8 percent contraction, with an economic loss of $4.3 billion.

Santa Clara County is headed for a 15.7 percent plunge in the output of its economy, and a loss of $15.1 billion in economic value.

“Getting through this may be a bit easier when you’re part of an economy that invents how the world lives and works in front of a screen,” according to StratoDem.

The researchers believe the shelter-in-place and social distancing constraints on economic activity won’t hobble Silicon Valley to as great an extent as the rest of the country during the second quarter.

“It’s not a surprise that in an economy where faceto-face contact evaporates, the I-280 counties will not be whacked as badly as the rest of the nation,” StratoDem Analytics said in its assessment.

Earlier this month, Beacon Economics predicted that while a sharp downturn and job losses are certain nationwide and statewide, the Bay Area tech sector could help the region dodge some of the worst of the negative effects.

“The Bay Area is vastly more resilient than the

rest of the country,” Christopher Thornberg, a veteran economist and founding partner with Beacon Economics said in an interview recently. “Tech workers, tech companies, are used to work online. They exist in the virtual universe. The Bay Area is more likely to be able to resist a downturn.”

Still, both Beacon Economics and StratoDem Analytics warned that the coronavirus panic will greatly batter some parts of the Bay Area.

“A lot of people are going to be suffering in the

Bay Area,” Thornberg said. “People working in restaurants, a lot of stores, hotels, airlines, they are going to have a tough time for a few weeks.”

StratoDem agreed that the families in the Bay Area face greatly differing experiences, depending on the kinds of jobs held by household members.

“Some households will ride out the storm okay, or even generate higher incomes by fulfilling new demand,” StratoDem stated. “Other households are already suffering in an economic reversal.”