Hope and hype aside, few really expected the dot-coms that helped drive this region a couple of years ago would last. But then the big companies -- the Intels, the Ciscos, the Applied Materials -- started shedding jobs. Now, the effects of an economy dependent on technology are rolling downhill.
Merchants and restaurateurs are hurting because cash-strapped locals are cutting back on spending -- even more so since the Sept. 11 terrorist attacks.
Sky-high housing prices are finally starting to fall, but foreclosures are starting to rise.
And as consumers hunker down and wait for better times, purchases of non-discretionary goods are nearly non-existent.
"I was planning on buying a boat," said Evan Sjostrom, an account executive at a temporary technical staffing company in San Jose. "But then I lost half of my business back in May. It's bad."
There are a few bright spots on the horizon. Sales of consumer electronics such as DVD players and televisions -- all of which contain computer chips and other tech equipment -- are strong this holiday shopping season. The dismally slow computer business even experienced a slight uptick last month, driven by new software and rock-bottom prices. And layoffs -- while still common -- are slowing. For the first time this year, the number of unemployed didn't increase last month, declining slightly to 66,800.
All that said, there's little indication that the technology industry -- and with it, the Silicon Valley -- will fully recover anytime soon.
With the recession, businesses nationwide are still putting off major technology purchases. Consumer interest is expected to continue to wane as well after the holiday shopping season.
Economist Levy predicts that while most of California and the rest of the nation will recover from the current recession by the middle of next year, it will probably take at least until the end of next year for Silicon Valley to rebound.
Likewise, research company Economy.com in West Chester, Pennsylvania, had forecasted that the economy of San Jose, the self-proclaimed capital of Silicon Valley, would grow slightly next year. After Sept. 11, it reversed that prediction and now is predicting a further decline.
"What I keep hearing ... is that it's going to be at least two if not four more quarters," before the local economy improves, said Carl Guardino, president of business consortium Silicon Valley Manufacturers Group.
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