You can thank iPad sales or health care hiring or even the new Tesla electric-car operation coming to Fremont. Whatever the reasons, Bay Area business leaders have turned surprisingly gung-ho on the region's economic outlook, according to the latest survey by the local business group Bay Area Council.
The turnaround in sentiment is startling: The quarterly poll, released Thursday, revealed that business confidence among local CEOs and top executives is at its highest level since July 2005, with the confidence index rising to 62 out of 100, up from 55 the previous quarter and from its all-time low of 31 in early 2009. And while its authors caution that the Bay Area still faces strong headwinds from the global financial crisis, the trend line is clear — the survey's latest reading is the third positive one in a row since last summer.
"Slowly but surely, we're seeing the Bay Area economy pull itself out of the recession and heading towards more job growth," said Jim Wunderman, president and CEO of the Bay Area Council. "Even though the markets continue to fluctuate and instability remains a threat, companies are cautiously expanding their work force, which is a good sign that the worst may be behind us."
The responses of the 500 CEOs and top executives in the nine Bay Area counties surveyed between April 26 and May 23 show that 58 percent think Bay Area economic conditions are better than six months ago, up 22 points from last quarter's survey. In addition, 63 percent said they expect a better Bay Area economy six months from now, up 16 points from last quarter.
"I see this as a modest piece of good news," said Stephen Levy, director of the Center for Continuing Study of the California Economy. "We're starting to see some upturn in venture capital funding, Tesla coming to NUMMI is great news, and we have all this buzz over the iPad and iPhone and their apps, along with growth at Google and Facebook. We're going in the right direction, but we don't know the speed. And it will take several months of good job growth before we make a dent in unemployment."
While California's unemployment rate is still painfully high at 12.6 percent, the Bay Area's slightly lower rate may be due in part to the region's tale of three "techs."
"The fact that we're on the leading edge of the emerging fields of cleantech, high tech and biotech," said the council's Joe Arellano, "has helped insulate us from the more negative parts of the recession."
Mark Edmunds of auditing firm Deloitte sees the Bay Area clearly on an upward track. Edmunds, vice chairman and regional managing partner for the Northern Pacific region, said: "Our clients are feeling much more confident about where the economy is heading. We're hiring, and financial services are beginning to blossom again."
"There's a lot of economic activity with China and especially Shanghai, and we're hoping the new Tesla plant will lead to really big things," Edmunds added. "With our local ecosystem of venture capital, entrepreneurs and a great work force, the Bay Area should be the center of the universe in cleantech."
Tom Escher, president and CEO of Red and White Fleet on Fisherman's Wharf in San Francisco, saw enough signs of increased consumer spending to hire a handful of employees a few months ago in anticipation of a robust summer for the cruise business.
"It might not be dramatic, but we're starting to see a turnaround," said Escher, whose grandfather started the business in 1892. It now employs about 80 people. "We're seeing people start to spend money in ways they weren't spending before. I call it the 'reluctant dollar,' and it's starting to come back."