2025 Mayors' Economic Forecast

Recap: 2025 Mayors' Economic Forecast

The 2025 Mayors' Economic Forecast offered a lighter take on the current economic and political challenges. Eugenio Alemán, Chief Economist and Investment Strategist at Raymond James, projected US GDP growth of 2.8% in 2024 and 2.4% in 2025, emphasizing economic resilience and advising that markets should be left to "clear." He highlighted strong consumer spending, representing 70% of the economy, and noted that 75% of recent fiscal stimulus funds remain unspent. AI investments are surging, with Capex from major tech firms reaching $211 billion—a 35% year-over-year increase. He also touched on the potential for growth under deregulation and the Fed’s shift toward easing interest rates.

Alemán drew parallels between Detroit and San Francisco’s falling office and retail prices, hinting at potential investment opportunities downtown. He added levity with a joke: Republicans don’t want to pay taxes; Democrats want republicans to pay the taxes.

Ken Rosen, Chairman of the Fisher Center for Real Estate & Urban Economics at UC Berkeley, provided a more somber outlook. He warned that federal cuts to legal immigration (45% of total immigration) could hurt labor markets and drive wage inflation, while reduced social program grants and higher tariffs could push inflation further. He expressed concern over tax cuts potentially leading to long-term bond rates exceeding 5%, which could harm the economy.

Rosen noted mixed employment growth: strong in leisure, hospitality, healthcare, and construction, but weak in tech and professional services. He said the current environment makes it a great time to buy office buildings in San Francisco, with some properties selling at just 25% of their previous value. Multifamily housing permits remain down due to high costs and a cumbersome permitting process, while rental vacancies are low. Despite this, San Francisco still lags behind 2019 rent levels, though short-term improvement is expected.

He also predicted rising oil prices, contrary to the administration’s promises, and highlighted that San Francisco faces the highest percentage of homelessness among major US cities, along with slow office workforce recovery.

Ryan Richardson, Oakland’s City Attorney, discussed crime reduction efforts during his conversation with Jim Gardner, editor-in-chief of the San Francisco Business Times. Richardson expressed optimism about Oakland’s reinvigorated “Ceasefire” program, though its results remain to be seen. Addressing homelessness, he acknowledged the equity gap, noting that minority communities are disproportionately affected by both homelessness and encampments in their neighborhoods. His ideal future headline for Oakland? “Has Oakland Turned a Corner?”

Mayor Lurie took questions from Gardner, addressing San Francisco’s $867 million budget deficit. He plans to eliminate redundancies, make strategic cuts, and enhance interdepartmental communication. A hiring freeze is in place across city departments, with a February 9th checkpoint set to assess progress. Lurie emphasized cooperation and estimated a six-month timeline to tackle the crisis.

Of key importance is his proposed Fentanyl State of Emergency plan, currently awaiting approval. He aims to maximize budget efficiency, noting that San Francisco’s $16 billion budget needs to be better utilized. His housing plan focuses on streamlining the permit process, incentivizing businesses to return, and bolstering public safety.

To that end, Lurie said law enforcement—including police, the sheriff’s office, and 911 services—will have a more visible presence, with officers walking beats. He pledged to reduce homelessness, dismantle open-air drug markets, and ensure that SF is no longer a magnet for drug activity. He added that he would know the city was safe when he and his children could walk down 6th Street without issue.

On the positive side, Lurie highlighted the success of the recent JP Morgan conference, which secured a commitment to return in 2025. Upcoming events like the Lunar New Year celebration and the NBA All-Star weekend will further showcase that “San Francisco is open for business.”

Lurie also supports requiring workers to return to the office, announcing that about 22,000 city employees will be back five days a week. Addressing fire concerns after Southern California’s recent tragedy, he assured that the city has been preparing since 1906 with full cisterns and access to bay water.

On immigration, Lurie emphasized local protections, vowing to shield immigrants and LGBTQ communities and resist federal deportation measures. Asked what headline he envisions for San Francisco’s future, he confidently replied: “San Francisco’s Back.”