Modest Economic Growth Still Forecast for Bay Area
BEFORE the earthquake jolted northern California, economists were expecting the region to experience modest economic growth. Those expectations have not changed. Although there is a lot of damage to the area's interstate highways - and by some estimates the total damage could reach $10 billion - most businesses survived the quake intact. And, even though many workers will find it difficult to get to work with the Oakland Bay Bridge closed, many new jobs will be created as the area rebuilds.
In addition, the federal government will be rushing aid to the stricken counties which have been declared national disaster areas. Elizabeth Dole, Secretary of Labor, says she sent a telegram offering funds for displaced workers to Gov. George Deukmejian. ``He needs to make an application to us and we can get the money flowing right away,'' Mrs. Dole said on Thursday at a press conference.
However, many workers will be able to find construction jobs. ``I understand contractors have all the business they can handle and suppliers are selling out of materials,'' says Pauline Sweezey, chief economist for the California Department of Finance. Replacing sections of the damaged interstate highway and strengthening the Oakland Bay Bridge will be long-term projects.
San Francisco department stores, however, may suffer since many shoppers will not be able to get into the city from the outlying counties. The Bay area represents 20-25 percent of the state's retail sales. ``The earthquake may suppress sales during the prime holiday period,'' says Adrian Sanchez, an economist for Security Pacific Bank in Los Angeles. ``It's important that retailers replace damaged inventory and quickly get their establishments back in order.''
Tourism is a major industry in San Francisco. Area hotels will likely see a temporary drop in business. Indeed, both American and United Airlines confirm that they have had short-term cancellations of reservations. Sara Dornacker, a spokeswoman for United, says the airline is allowing passengers to make changes in their tickets without a penalty as long as the caller says the earthquake is forcing them to alter plans.
San Francisco is also a big convention city. So far, there are no signs that conventioneers are canceling, says Betsy Cassidy, editor-in-chief of Association Meetings, a Maynard, Mass., magazine. ``I think people may be a little leery, but I think that will pass,'' Ms. Cassidy says.
That is in fact the case with the American Association for Marriage and Family Therapy which is scheduled to host a conference of close to 5,000 people this Thursday through Sunday at three Bay area hotels. Diane Sollee, executive director, says the group checked with the mayor's office and its local representatives before deciding to hold the meeting as planned.
The Association made one change: it decided to weave in the theme of dealing with the stresses of the earthquake into its presentations. And, Ms. Sollee found that some members were hopeful that the earthquake would help them get into some of San Francisco's normally busy four-star restaurants.
Although the total earthquake damage estimates are high, the cost to the insurance industry probably will not be as high as the damages from Hurricane Hugo. Earthquake coverage costs extra, with prices varying according to location. According to the Insurance Information Institute, only 15 percent of homeowners have insurance and about 20 percent of Northern California businesses.
Unfortunately for the insurance industry, the combination of the two natural disasters will make 1989 its biggest year for paying out claims. Hurricane Hugo alone has cost the industry $4 billion so far. Other losses will add another $1.6 billion.
The high technology area also appears to have weathered the quake. ``There seem to be some minor problems, but most of the firms seem to be up and running again,'' says John Savacoll, a regional economist at the WEFA Group in Philadelphia.
In fact, Anthony Easton, the chairman of General Cellular Corp., says the earthquake helped business. Stockbrokers on the floor of the Pacific Stock Exchange used cellular phones to execute trades. ``A lot of people have said, `I've got to get a cellular phone,''' Mr. Easton says.