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Silicon Valley Index Paints Complex Picture for Region's Economy

January 31, 2005

As a percentage, Silicon Valley has lost more jobs over the past four years than any U.S. metropolitan area since 1939, but evidence shows the region is stabilizing with a return to levels reminiscent of the late 1990s. Funding for venture capital is up, per capita income is increasing, and research and development funding has reached new highs. Yet, the region's most striking feature of late is, perhaps, the way it is growing, according to the 2005 Index of Silicon Valley.

The index, recently released by Joint Venture: Silicon Valley, shows the state of the region's economy is a muddled picture depending on how far back one goes to measure it. Since 2004, the results are positive, but medium-term-and-beyond comparisons reveal sharp declines. If one benchmarks the region against pre-dot.com levels, then it would appear the Valley has "resumed an incremental pattern of growth," the authors say.

Silicon Valley has experienced a change in how it grows, the index states. It has grown in terms of productivity, but not in terms of jobs, and evolving patterns of housing development attest to the change.

"The technology revolution and intense global competition have led Silicon Valley companies to achieve high productivity gains without adding to their payroll, creating a strange new world in which economic growth is strong even while job growth is sluggish," says Russell Hancock, president and chief executive officer of Joint Venture: Silicon Valley.

Local governments are challenged to make difficult budget choices, as revenue streams destabilize, Hancock adds.

The 10th annual index, which continues the work set forth in past editions, considers 37 indicators or measures of the region's health. The latest edition tracks those industry drivers that collectively employ 32 percent of the region's workforce, using the North American Industry Classification System, and provides employment and wage data for other major industries.

Each of the annual indexes have aided Joint Venture: Silicon Valley in the effort to monitor progress of those goals outlined in the group's first strategic plan, Silicon Valley 2010. The 2005 edition includes tables depicting each goal with progress made and questions to be answered. The Joint Venture: Silicon Valley index is available at: http://www.jointventure.org/