A surge in Bay Area technology and health care jobs has helped to power the region’s economic output past that of oil kingdom Saudi Arabia and finance center Switzerland since 2014, according to a new report.
If the Bay Area were a nation, it would command the 19th-largest economy in the world, the Bay Area Council’s Economic Institute said Tuesday, comparing the region’s gross domestic product to that of nations around the globe.
Better still, the nine-county region’s dynamic economy is still charging ahead, the institute said. In 2014, the last time the Economic Institute released such a comparison, the Bay Area ranked No. 21.
“The economy in the Bay Area is growing at about 4 percent a year and about twice as fast as the U.S. economy,” said Jeff Bellisario, a vice president with the Economic Institute and co-author of the study. “The Bay Area economy is very much driven by Silicon Valley and San Francisco, but the tech ecosystem has grown across the Bay Area.”
With its current No. 19 ranking, this region is gaining on the economic output of countries such as the Netherlands, Turkey and Indonesia.
“The Bay Area has emerged from the Great Recession to enter a new period of immense growth and innovation,” the institute said in the study, which is the 10th economic profile issued by the organization.
The Bay Area’s economy, as measured by gross domestic product, produces a yearly economic output valued at $748 billion. By comparison, the Netherlands, at No. 18, has a GDP of $822 billion. No. 20 Switzerland comes in at $686 billion.
The Bay Area Council represents some of the Bay Area’s largest employers. Its Economic Institute compared the size of the Bay Area’s economy with that of nations’ economies but didn’t compare the local economy with those of other major metropolitan areas.
Some other big metro areas’ economies in the United States are larger than the Bay Area’s. The metro area of New York City, northern New Jersey and parts of Pennsylvania, a statistical region created by federal officials, has an economy valued at $1.66 trillion and is No. 1 in the nation, according to the federal Bureau of Economic Analysis, a widely followed organization. The Los Angeles County and Orange County region is No. 2 at $1 trillion. The Bay Area’s economic output is at No. 3, followed by the Chicago metro region at No. 4 and Dallas-Forth Worth area at No. 5 in the United States.
If they were independent nations, the New York City region would be No. 12 worldwide, just after Russia and just ahead of South Korea; the Los Angeles-Orange County area would be No. 16, between Mexico and Indonesia; Chicago would be No. 21 globally, between Switzerland and Saudi Arabia; and Dallas wouldn’t even make the top 25 nations and would be smaller than Poland’s economy.
The United States, which still wields the world’s largest economy by far, has a yearly economic output valued at $16.77 trillion.
Silicon Valley, fueled by its tech giants and digital startups, has evolved into the primary engine that drives the Bay Area’s remarkable growth, according to the report and this news organization’s assessment of state labor data.
Over the one-year period that ended in May, total payroll jobs grew by 3.2 percent in Santa Clara County, outstripping the 2.3 percent growth in the Bay Area.
California’s job market is expanding at 1.8 percent a year, while the United States’ is growing at 1.6 percent a year — half the pace of the South Bay.
The conclusion? Silicon Valley is an economic engine rather than a caboose.
The Bay Area’s surge in the global economic rankings comes as California has become the 5th-largest economy in the world, recently passing the United Kingdom. As recently as 2012, California had fallen to as low as 10th largest.
Nevertheless, not everyone in the Bay Area has shared in the wealth created by these boom times.
“In spite of being home to the spectacular economic engine of the Bay Area, the state of California also has the highest levels of real poverty and child poverty in the nation,” the report stated. “Many of the Bay Area’s residents are housing-cost burdened, and homelessness has increased.”
The housing woes have forced people out to regions that border the Bay Area, such as the Central Valley.
“This is a very successful economy, but all of this economic activity is being dropped into an area that is largely already developed,” said Russell Hancock, president of Joint Venture Silicon Valley. “We don’t have any way to house the workforce here, and that is threatening the economy. Housing is simply out of reach for people.”
The report’s authors also gave some thought to potential solutions for the region’s dilemma.
“The question is: Where do low-income and middle-income people live?” Bellasario said. “The solution is more transit-oriented development, thinking about new kinds of affordable housing and more transportation on demand.”
Yet despite the region’s housing woes, few signs have emerged that the boom will end anytime soon.
“The Bay Area economy is still currently on the upswing, rather than having reached a peak or started a decline,” the report stated, while the rocket-like trajectories of the region’s tech giants such as Apple, Google, Facebook and Adobe Systems are “almost unprecedented.”