Silicon Valley finally recovers from bust
Silicon Valley has finally recovered from the burst of the dot-com bubble, with its first significant job increase since the recession that started about six years ago, according to a new report.
"Silicon Valley is back," says Doug Henton, president and founder of Collaborative Economics, a firm that provides strategic advice to civil leaders. He presented findings of the Silicon Valley Index, an annual economic report, at the State of the Valley conference held in San Jose on Friday and sponsored by the Joint Venture Silicon Valley Network.
In 2006, Silicon Valley added 33,000 jobs, up nearly 3 percent from a year earlier. There was particular growth in creative and software industries, but declines in hardware and corporate offices, he said. The creative industry includes jobs like lawyers, accountants, engineers and those in advertising.
Innovation and new technologies, such as clean technology, biotech and Web 2.0 Internet firms, are fueling much of the growth. Venture capital funding to clean technology firms increased 266 percent last year, investing about $300 million by the third quarter alone.
Meanwhile, Silicon Valley snared 27 percent of the total venture capital funding in the country, Henton said.
"We're back to where we were in 1998 in venture capital (funding), he said. "Silicon Valley is reinventing itself and you see it in a number of these venture capital dollars."
Meanwhile, income grew for the third year in a row, with per capita income in the Valley being 1.5 times greater than the national average. For the first time since the recession, the median household income increased 6.5 percent to $76,300.
However, rental prices are up and only 26 percent of first-time buyers in Silicon Valley--and 25 percent in California overall--are able to afford the median-priced home, according to the report.
After giving a talk at the event, Google Chief Executive Eric Schmidt told reporters that he was pleased, but not surprised, to hear the good economic news.
"The Valley is incredibly creative," he said. "The Valley has always been cyclical. The smart people all knew it would come back."
Schmidt declined to comment on how much of a part Google may have played in the recovery, but in his talk he said that by focusing on search Google has hit on the killer app of the information explosion age.