Assessor says recession is near but local economy still in gear


A U.S. recession could hit as early as next year, yet locally, economic optimism abounds.

Santa Clara County Assessor Larry Stone discussed current trends and his reasons for optimism during an April 11 presentation at the Rotary Club of Los Altos.

Stone, the county’s assessor since 1994, expects a recession, though not a severe one, by mid-2020.

“We are really overdue,” he said, after nine years of prosperity.

He believes a recession could result primarily from political factors: international tariff wars; dysfunction in Washington, D.C.; impacted real estate markets; multiple interest rate hikes by the Federal Reserve; a budget deficit reaching $1 trillion; inflation; and revolving consumer and national debt, which was 150 percent of gross domestic product and ballooned to 330 percent of GDP.

Despite looming negative signs, Stone’s outlook is bright. The Silicon Valley economy, he noted, is on “a very solid foundation.”

“For the first time in history, the Bay Area has 4 million jobs, fed by the technology sector,” Stone said. “We are adding jobs in spite of record home prices, traffic jams and labor-force constraints.”

Median household income in San Jose has now risen to $122,000, the 10th highest in the U.S., according to Stone.

Stone said the region’s economic boom is not headed for a dot-com bust, as occurred in 2000, because well-established companies such as Google, Apple, Samsung, LinkedIn and Nvidia now favor owning their land and buildings rather than leasing properties. The assessor noted that the leasing of office and research-and-development space has enjoyed eight years of expansion. By the end of 2018, 4.7 million square feet of office space was under construction, he said, with three-quarters of it pre-leased before the end of construction. He added that modern floor plans that put more employees in less space have become a trend.

Stone said Amazon is developing smaller warehouses closer to where people live for faster, cheaper delivery, planning one-hour delivery in most U.S. markets.

Retail, housing woes

On a negative note, Stone said the retail sector – especially malls – has failed to keep pace with current online shopping preferences.

“One major retail researcher predicts that 30 percent of the nation’s 1,100 malls will close in the next 10 years,” he said. “The U.S. is simply ‘overstored,’” with only high-end malls like Stanford Shopping Center and Westfield Valley Fair continuing to prosper.

The job market is also changing markedly. According to Stone, 40 percent of all jobs will be displaced by artificial intelligence within 40 years, per a recent Oxford University study.

Stone said millennials – those born after 1980 – no longer see homeownership as their American dream. In 2018, a majority of those under 30 preferred to rent living space. In fact, over a 12-year period, their rate of homeownership fell to its lowest point since 1967.

They’re also riddled with college debt, the assessor observed, making it more difficult to qualify for a home mortgage. Student debt increased by 600 percent ($260 billion to $1.46 trillion) between 2004 and 2018, Stone said.

Multifamily housing and apartment rental rates have increased 52 percent over the past eight years, he said, and rates continue to rise. There has been “too much money chasing too few homes, causing home prices to skyrocket,” he said.

Still, Stone noted the median price of single-family homes over the last seven months has declined 16 percent in Silicon Valley.

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Marlene Cowan is a member of the Rotary Club of Los Altos. For more information, visit

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