Stephen Levy, director and senior economist at the Center for Continuing Study of the California Economy.
Veteran economist Stephen Levy has his finger on the pulse of the Bay Area’s dynamic—and often confusing—economy.
The Bay Area has spawned numerous boom-bust-boom cycles that have spawned and busted countless cutting-edge companies, and Levy keeps track of them.
This news organization spoke with the director of the Palo Alto-based Center for Continuing Study of the California Economy about the Bay Area’s troubled economy.
Q: How do you feel about the economy in the Bay Area right now?
A: 2023 is going a little better than I expected in the Bay Area. But it’s still going to be a slow year in the Bay Area. Interest rates are very high and a problem.
Q: What does the future hold for the Bay Area?
A: Long-term, I am very optimistic about the future of the Bay Area economy. Things will look particularly good if we can overcome the region’s housing and traffic problems.
Q: What are some of the reasons that lead you to believe the Bay Area has good prospects?
A: Given electric vehicle technologies, artificial intelligence, and clean energy, the Bay Area is actually in pretty good shape to be competitive in the long term.
Q: Can the Bay Area somewhat withstand these ups and downs?
A: We weathered the dot-com bust in 2000 and the foreclosure crisis in 2008. This time, post-COVID, we are still creating new jobs on a net basis.
Q: What is your overall view of California’s economy in the short term?
A: California is in pretty good shape and Southern California is actually doing pretty well.
Q: Could the Hollywood studio strikes lead to a downturn in Southern California?
A: We have the actors and writers strikes in Southern California. But we also see a track record of resolving strikes in Southern California. The dock workers’ strike against the shippers was resolved relatively quickly. California ports are doing better and airports across the state are improving.
Q: What does California’s economy look like over time?
A: I’m optimistic. However, the state needs to solve its housing and transportation problems.
Q: Some experts believe the economy will slow to stop inflation, but not slow enough to cause a recession. Is a soft landing for the economy possible?
A: The US jobs report for July showed that hiring has cooled, consistent with the idea that a soft landing is now possible.
Q: How likely is a soft landing at this point?
A: We haven’t had a soft landing in a long time. It would be a unique, very lucky event if it happened. But the signals are there that it is possible.
Q: Where are we now with tech layoffs in the Bay Area?
A: I view the layoffs as a short-term realignment of the tech workforce. These layoffs are painful for the people who lose their jobs. But perhaps we will see the end of layoffs.
Q: What is the goal of rebalancing?
A: The technology companies see the potential for artificial intelligence and electric vehicles, the new industries. If you look at the big tech companies, they’re all doing really well. They now see more optimism for the technology.
Q: Will tech companies go from layoffs to hiring again?
A: We may be entering a period of renewed growth for technology. The highly skilled technicians who were laid off will likely have an easier time finding a job relatively quickly.
Q: How has the shift to work from home due to COVID-19 impacted the downtown areas of San Jose, Oakland and San Francisco?
A: Work from home is widespread in the inner cities, in downtown San Jose and in downtown Palo Alto, where I work. People still have income, but they’re not physically in the downtown areas, so they’re not physically spending their money downtown. However, there is now some momentum for hybrid working.
Q: If hybrid work is the future, should cities and counties change their approach to housing?
A: We should focus on building housing in downtown areas to build the customer base for downtown shops and restaurants.
Q: Is the Bay Area economy recovering from COVID woes and tech layoffs?
A: The Bay Area faced far greater challenges in terms of job losses and threats in 2000 with the dot-com and in 2007 with the housing bubble than we face today. In 2000, job losses from the dot-com collapse were far greater. We have a history of resilience.
Q: What is the long-term outlook for the Bay Area economy?
A: The production of electric vehicles and batteries, as well as clean energy and AI, supported by the Chips Act and the Infrastructure Act – all of these factors put us in pretty good shape. But we need to be able to get people to work and create affordable housing near where they work.
Q: What are the biggest challenges facing the Bay Area economy?
A: We are facing a challenge regarding the transmission capacity of our electricity grid. We will need a lot more electricity for the technologies of the future. But at the moment we don’t have the capacity or transmission technology to really prevent power outages.
STEVE LEVY
Organization: Center for Continuing Study of the California Economy (CCSCE), based in Palo Alto
Occupation: Senior Economist and Executive Director
Age: 81
Place of birth: Los Angeles
Residence: Palo Alto
Education: Massachusetts Institute of Technology, bachelor’s degree in economics; Stanford University, Masters in Economics
Family: Wife Nancy, son David and grandchildren Maverick, Daisy and Monroe
FIVE THINGS ABOUT STEVE LEVY
– Married to Nancy for 45 years, described by Steve as “the love of my life.”
— Their son David married Lacey, a “most wonderful daughter-in-law and “great mother” to the Levys’ grandchildren.
— At age 59, Levy began Russian kettlebell training, which kept him fit and competitive. He has also played bridge tournaments at a high level.
— He is passionate about volunteering for more housing for everyone and expanding job opportunities.
— His hobbies now include reading, walking, playing sports and, most importantly, spending time with his son’s family in Ventura and on vacation.
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