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This is a pretty big reason why I don't put much stock in GDP numbers or number of F500 companies in a metro area for that matter.
Well, these are all individual factors that combined paint a picture, alone they are not the end all, but they do have a role in demonstrating trajectory, which is interesting for many reasons.
Furthermore, layoffs don't actually affect GDP negatively, if anything they are sign of efficiency if we're being honest. That sound harsh, but it's true. Also, some cities GDP growth is the natural affect of services needed due to rampant population growth rather than meaningful growth in business sectors. The Bay Area's population has been growing stagnantly for decades but the GDP has soared.
Yeah, we keep hearing how the Bay Area is dying and it's citizens are miserable. From my experience, not really. SF isn't a company town. Things aren't catastrophic like when the coal mining company shuts down in Appalachia.
Yeah, we keep hearing how the Bay Area is dying and it's citizens are miserable. From my experience, not really. SF isn't a company town. Things aren't catastrophic like when the coal mining company shuts down in Appalachia.
I don't think anyone is saying that there's anything resembling a catastrophe here (on this thread, at least). Places like the Bay Area (and California generally) will of course continue to be the top magnet for US innovation and high-growth tech companies.
But especially with interest rates remaining high for the foreseeable future (the only way to combat inflation at this point is to tamp down growth), I just don't see how the tech brake-pumping that's going on right now isn't going to at least lead to a hiatus in any meaningful growth for at least a couple of years until the economy adjusts. Keep in mind that we're only hearing about layoffs; that doesn't even speak to companies that are going to put a hold on hiring.
And again, people often forget that the while the recent Big Tech jobs that were lost were overall a relatively small share of the market, they're arguably more critical than usual to the economy, because: 1) these are the kinds of high-paying jobs that support many other service jobs; and 2) these high-profile layoffs will continue to spur similar layoffs spreading to other industries, too. It's giving many companies "cover" and justification to "trim the fat," so to speak.
Yep. All needs tech. Look up the most powerful companies 50 years ago vs the most powerful companies now. Tech is the current and new economy. Sorry brother.
I agree with that as well. I didn't say it was the only reason.
Even though Austin and the Bay are both tech dominated, the dynamics are still different between the two. The Bay Area is out of reach for almost everyone because of the cost to live there which makes it harder. That isn't just because of tech dominance though. A lot of it is because wealthy Chinese nationals have bought up so much of it (parts of LA are the same). A lot of it is that because it has mild weather and beautiful surroundings, its a highly desirable place to live. Austin has some pretty surroundings and a little bit of foreign investment, but because there are no natural barriers and its so much smaller, you could still find places around the area to live. That, at least in my opinion, is why things are much more high risk for the Bay in a downturn.
Could you also make the argument that Austin could fare much worse in a tech downturn since the Bay has a much more diversified economy? Just curious.
I don't think anyone is saying that there's anything resembling a catastrophe here (on this thread, at least). Places like the Bay Area (and California generally) will of course continue to be the top magnet for US innovation and high-growth tech companies.
But especially with interest rates remaining high for the foreseeable future (the only way to combat inflation at this point is to tamp down growth), I just don't see how the tech brake-pumping that's going on right now isn't going to at least lead to a hiatus in any meaningful growth for at least a couple of years until the economy adjusts. Keep in mind that we're only hearing about layoffs; that doesn't even speak to companies that are going to put a hold on hiring.
And again, people often forget that the while the recent Big Tech jobs that were lost were overall a relatively small share of the market, they're arguably more critical than usual to the economy, because: 1) these are the kinds of high-paying jobs that support many other service jobs; and 2) these high-profile layoffs will continue to spur similar layoffs spreading to other industries, too. It's giving many companies "cover" and justification to "trim the fat," so to speak.
This is very well put.
I agree that there is nothing catastrophic happening even if tech companies are shedding jobs, because almost every large metro is diverse enough to avoid a "company town" or "one industry" collapse.
But there are at least some warning signs (starting with the housing bubble markets like the Bay Area have been experiencing) and now the tech layoffs, where it won't lead to an all out collapse, but a pause and maybe even some regression in metrics such as employment/GDP growth. And it may actually not be a bad thing in the long run for a place like the Bay Area that has unsustainable housing costs even if it boasts higher wages.
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Originally Posted by DaBears02
Could you also make the argument that Austin could fare much worse in a tech downturn since the Bay has a much more diversified economy? Just curious.
There are two things that the Bay has that Austin doesn't that will make it harder for the Bay IMO:
1) A crazy high cost of living
2) Massive amounts of wealthy Chinese buying up everything
I'm not saying it will be economically harder but it will be harder for your average resident of those places.
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