An evening out to listen to an economist might not be most people’s idea of a good time.
Still, Jean Dowdall figured the event might facilitate an ongoing debate she’s been having about whether San Francisco is improving — or still struggling.
“The more we know, the more I think we feel we can slug it out and argue about which way the City needs to go, and is going,” Dowdall told Gazetteer SF.
Dowdall, her husband George, and their friend Pete Hammer are hardly alone in the endless dialectic of whether San Francisco is turning a corner, and if so, what lies on the other side. To help figure it out, they went to a sold-out event last night at Manny’s in the Mission to listen to Ted Egan.
As San Francisco’s chief economist since 2007, Egan offers a sober voice of reason, and plenty of data, in a debate often clouded by politics and emotion. Especially for an economist, he’s also weirdly enjoyable to listen to.
Egan sees San Francisco facing four headwinds since the Covid pandemic: the ensuing shutdown, the related work-from-home phenomenon, tech layoffs, and the (now-mostly-postponed) Trump tariffs. Coming into Egan’s talk, Dowdall was more curious about the local economic effects of Mayor Daniel Lurie’s defeat of London Breed. Dowdall and her husband moved to San Francisco recently from Philadelphia. Their friend, Hammer, who accompanied them Tuesday night, has lived in the city for more than four decades and believes the city was improving under Breed’s leadership.
Dowdall disagreed.
“I'm only here, I’m going to say five years, and I think the city is a disaster,” Dowdall said. She pointed to the San Francisco Centre. “What is going to happen to that white elephant, and who is going to solve that problem? It's just truly overwhelming to think about the real estate problem, housing, unused office space — all those problems.”
Egan parsed all of those subjects, which have been covered over the years in some detail. But last night he offered a more up-to-date, and particularly revealing, picture of the challenges facing San Francisco’s downtown and retail businesses. While data shows employers want workers back in the office, he said, workers continue to show a resistance to returning more than three days per week.
“We don’t see a lot of data showing this is changing,” he said. Working from home is “here to stay.”
San Francisco has lost 20 percent of its retail jobs since 2019, by far the largest drop in California’s 15 largest counties, according to Egan’s data. He showed a slide that reinforced the loss, showing that in the same time period the City has lost 35 percent of its residents who work in retail or food preparation and serving.
“That is the workforce of the industries that are having a hard time recovering,” Egan said.
He pointed to a “silver lining” of San Francisco’s treacherous housing market. In 2017, the City’s housing prices were 5.5 times the U.S. average. It has since dropped to about four times as much, he said. Rents, which had been about three times the national average, are now closer to double, he said. While Egan acknowledged that the reduction may not be enough to lure restaurant workers back to San Francisco, it makes housing “potentially affordable to a whole set of people it wasn’t before.”
But residents in retail and restaurant work took a “one-way ticket” out, Egan said, their return likely now foreclosed by recent rent increases. “You don’t just pop back into the city once you’ve lost your rent-controlled apartment,” he said.
San Francisco’s recovery is, of course, complicated by Egan's fourth headwind: President Trump’s tariffs. Almost since his election, I've been pestering the economist for any ray of light he might shed on the darkness and chaos the black hole at the White House has sucked the planet into.
Egan, as definitive a source as they come for what’s ailing San Francisco, discussed the gamble involved in trying to read any reason in Trump’s trade tactics.
At his talk Tuesday night, he referred to the president's pattern of proposing or implementing controversial policies, only to whimsically throw them into reverse – just as Trump did, again, today.
“It’s not the end justifies the means — the end is protectionism,” Egan added. “There’s the negative shock of this, which seems severe. But it’s hard to walk this back without capitulating, which seems like a hard thing for Trump to do.”
According to Egan, the Bay Area is “poorly situated” in the trade war Trump has ignited. He thinks of the tariffs as being “a swing-state play” aimed at but which will ultimately hurt workers in those regions as well. But the Bay Area long ago lost the manufacturing sector that Trump has targeted as the supposed beneficiary of his policies. As a leading Bay Area example, Egan pointed to Apple, its global supply chain, and the widely reported cost of an iPhone jumping from $1,000 to as much as $4,000 as a result of the tariffs.
It’s too early to measure the particular harm San Francisco in particular will suffer, Egan said, likening the tariffs to a “flash-bang” effect in which the real damage will sink in over time, after the initial shock.
“We know generally that it’s not good, but we don’t know the specifics,” Egan said. “We are part of a national economy that’s going to suffer as a result of these tariffs.”
