Beacon Economics: Contra Costa’s households strong but housing shortage is a systemic risk

Beacon Economics economist Chris Thornburg told the Contra Costa County Board of Supervisors on the retreat floor that the U.S. and local economies remain stronger than many forecasts predicted but that structural vulnerabilities could lead to a sharper downturn in the future.

Thornburg led a wide‑ranging economic briefing, front‑loading the most important points: consumer balance sheets are unusually healthy and have been supporting growth, but the durability of that strength is being propped up by asset values and federal deficits rather than broad‑based, sustainable gains. “The household finances look about as good as they ever have,” Thornburg said, noting household net worth and real wages had improved for lower‑income workers in recent years.

Why it matters: The county’s revenues, long tied to property values and taxable sales, look healthy near term. But Thornburg warned Contra Costa officials that a long‑running shortage of housing — not a short‑term slump — is the core local vulnerability. He described how rising incomes, demographic change and the lack of new units are causing residents to “spread out,” putting pressure on lower‑income households and worsening homelessness in California and the Bay Area.

Details and local context: Thornburg presented nationwide data on household debt, wages, and asset prices and then drilled into California and Contra Costa specifics. Key local takeaways he gave the board included: Contra Costa’s median household income ranks among the highest U.S. counties, the county has regained and exceeded pre‑pandemic payroll levels, and recent job growth locally has come from healthcare, logistics and construction rather than the large tech employers on the West Bay.

On the Bay Area tech slowdown and the county’s opportunity: Thornburg framed the Bay Area’s tech sector as cyclical and said recent tech weakness briefly released workers back into the county labor market. He cautioned, however, that the long‑run problem is an overreliance on one industry (what he called a “Dutch disease” dynamic) and repeated that Contra Costa’s ability to capture better‑paying, local jobs will depend on housing supply and on converting industrial opportunities (including decommissioned refinery land) to light manufacturing and logistics that pay well locally.

Budget relevance: Thornburg told supervisors to expect a continuation of modest revenue growth in the near term but warned that rising federal deficits and stretched asset valuations could reverse the picture. He advised county leaders to be prudent about one‑time budgeting decisions and to prioritize housing and workforce investment to protect long‑run resilience.

Ending: The presentation set a cautious, evidence‑based tone for the board’s retreat discussions on economic development and budget priorities. Thornburg closed by urging local officials to emphasize housing supply and to develop plans that can make the county less vulnerable if national asset valuations falter.