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San Francisco, Epitome of the “Everything Bubble,” Faces Fiscal Chaos. Boom-and-Bust, Always. Now is the Bust

IMAGE: USBacklash.org

“I’ve stopped defining worst-case scenarios because they keep getting worse every week”: San Francisco’s controller.

By Wolf Richter | 31 May 2020

WOLF STREET — The lockdowns have created a fiscal nightmare for states and cities. But few major cities have gotten slammed as hard as San Francisco, whose single most important industry – tourism, including travel for leisure, conventions, and business – has essentially shut down and whose tech and unicorn startup sector has been laying off people in large numbers — a trend that started last year.

Uber, one of the largest employers in San Francisco, has been laying off people starting in 2019. Numerous startups have shut down or trimmed down before the lockdowns happened. Charles Schwab has been shedding staff in the City for a while and last November announced that it would move its headquarters to Texas. Macy’s announced at the beginning of February that it would shut down its tech center, the headquarters of macys.com, and lay off 1,080 people who’d been engaged for years making its ecommerce business a success. So the writing was on the wall.

Then in February, tourism plunged as travelers from China disappeared and as conventions were cancelled. The city is aggressive in extracting money from tourists at every twist and turn, including hotel taxes and rental car taxes. Since the lockdowns and travel restrictions came into effect in mid-March, tourism has practically died. The hotel industry alone employed about 25,000 people in the City. […]

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2 Comments on San Francisco, Epitome of the “Everything Bubble,” Faces Fiscal Chaos. Boom-and-Bust, Always. Now is the Bust

  1. TX has no state income tax and life there is significantly cheaper than SF/the SFBA — but that (cost of living, especially real estate) will likely soon change as the influx to TX is sizable and increasing — saw a recent joke that Texans wanted to erect “Welcome to Texas” signs on the highways entering Oklahoma — so that is probably part of the reason for Schwab’s move; I believe some of their customer service is based there already (Dallas) — Schwab went to no commission trading for stocks and ETFs some time ago (75c per option contract) — so I guess they need to reduce costs too.

    San Diego was nice, and a lot cheaper than the SFBA when I moved there from ‘Silicon Valley’ in 1998 — now re cost of real estate etc, it is hard to tell the difference — TX will likely suffer the same fate — its more desirable urban and suburban areas will, anyway.

    Once on a flight from Europe to Dallas, half the plane was full of (dot) Indians, which was a surprise to me; some looked like parents — but tech companies there have also abused H-1B.

    Sad — I feel sorry for young people today.

    • But don’t forget rural, especially majority Hispanic far west Texas (and I don’t mean El Paso!)

      In fact the cops will love it…almost everyone they stop for whatever reason (speeding, dirty license plate, busted tail light…) just happens to have a California license plate…they almost never ticket locals… In the last ten years at least (more like twenty) my mountain-rural-remote POA has seen an influx, and as the cities go crazy, more and more (esp. whites) are moving out here…land is still cheap, about $1500-2000 an acres (minimum 5 acres). But yes, Texas will likely suffer the same fate, just less so out in my neck of the woods, and ranchers aren’t selling out either…they can process their own meat, don’t need closed down meat plants.

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