Economy of the US continues to grow steadily, but uncertainty lingers

The U.S. economy keeps rolling along, but the latest Federal Reserve economic snapshot reveals some concerns about the impact of government policies.

Economic activity increased at a “modest” to “moderate” pace in all 12 Fed districts across the country from mid-February through the end of March, according to the “Beige Book” issued today from the Federal Reserve System.

Nationally, services, energy-related business and tourism/travel activity picked up. Some results were mixed: Home construction accelerated as home sales growth slowed and manufacturing grew, but the growth of freight shipments slowed. And consumer spending, agricultural and commercial and industrial construction varied across regions.

Still, some executives in manufacturing, housing, retail and technology around the country expressed concerns about policy uncertainty.

In the San Francisco district, hotel receipts were up, but hoteliers noted that hotel stays were “lower than expected due to changes in immigration policy and increased scrutiny of foreign arrivals.”

In the Dallas Fed district, a few manufacturers were especially worried about changes that would impact trade with Mexico. Mexico is Texas’ No. 1 export market.

Nationally, some retailers said expected visa reductions and limited ability to raise prices increased their uncertain outlook and could hinder expansion plans.

Some national tech executives expressed concern that continued legislative struggles could dampen future business confidence and that hostile immigration policy could further tighten labor markets for skilled and unskilled labor. Employment remained tight with increasing wage pressers in many regions. Some executives in the San Francisco district noted that technology and non-technology sectors increasingly are competing for workers with similar advanced skills.

In addition to California, the San Francisco Fed district includes eight other states — Alaska, Arizona, Hawaii, Idaho, Nevada, Oregon, Utah and Washington — plus American Samoa, Guam and the Northern Mariana Islands. It’s the largest in terms of geography and size of the economy of the Fed’s 12 districts across the country.


Poll: High housing costs may push out San Francisco Bay Area millennials

It’s no secret that the San Francisco Bay Area is an expensive place to live.

Now, a new poll has found that nearly half of all millennials (people age 18 to 39) in the area are considering leaving because of the high housing costs and traffic.

Forty-six percent of Bay Area millennials (vs. 30 percent of people age 65+) are considering moving to more affordable areas in the next few years, according to the survey by the Bay Area Council, a business-sponsored public policy organization.

The average apartment rent in San Francisco was $3,809 in February, according to Rent Jungle. The Bay Area single-family home in February sold for a median $784,470, up 12 percent from a year earlier, according to the California Association of Realtors.

University of California, Los Angeles economist Jerry Nickelsburg recently wrote on Zócalo Public Square that often the most attractive cities are those where housing is considered “unaffordable.” It’s basic economics — supply and demand.

Some people, however, argue economics have been warped as Google workers and Airbnb rentals drive up housing costs. Demographia’s 2017 housing affordability study notes that rising housing costs usually hit younger and low-income residents the hardest.

Demographia’s list of 11 affordable U.S. major housing markets includes Buffalo, N.Y.; Cleveland; Detroit; Grand Rapids, Mich.; and Indianapolis. The least affordable places are San Jose, Calif.; Honolulu; Los Angeles; and San Francisco. Notice a trend?

Let’s face it people live in the Bay Area because it’s beautiful and it has many desirable amenities and jobs — high-paying ones — in growing industries. And people will pay more to live in a nicer place.

Nickelsburg asks a solid question: If housing prices were more affordable, would that improve supply in a place like San Francisco or would it simply drive up demand?

There’s no easy answer. One thing is certain: It’s likely that the Bay Area will continue to attract new residents.