Economic report foresees likely recession in Bay Area

The housing market slump is likely to shove the East Bay into a recession, albeit a short one, in the coming six months, a forecast released today predicted.

By late this year or early next year, the Alameda County-Contra Costa County area has a 75 percent chance of suffering from job losses and income erosion. The chances of a mild slowdown in economic activity are just one in four, according to the report by two California economists, including a former analyst with the closely watched UCLA Anderson Forecast.

The grim outlook for the region contrasts with the steady economic expansion the East Bay has enjoyed in recent years. The East Bay avoided much of the wreckage from the dot-com meltdown, mainly because it has a well-balanced economy that mirrors the nation. But in this downturn, the similarities between the East Bay and the rest of the country make it a prime candidate for a recession, Beacon Economics principal executives Christopher Thornberg and Jon Haveman said in a report prepared for the Bay Area Economic Forum. Like the rest of the country, housing is a big part of the East Bay economy.

"The East Bay is a slice of Americana," Thornberg said. "If the U.S. has a recession, the East Bay definitely will have a recession. And both areas have a 75 percent chance of having a recession."

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