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If we balance recent stock market skepticism and media attention focused on the possibility of recession alongside ongoing North Bay economic activity and the positive sentiment of Bank of Marin clients, the outlook for business growth in 2019 is optimistic — with a strong dose of caution.

The California Employment Development Department reports that unemployment hovers below 4 percent in much of the San Francisco Bay Area — and well below 3 percent in Marin, Napa and Sonoma counties. Employers continue to add jobs at a steady clip across multiple industries.

Greater San Francisco’s gross domestic product grew by 4.3 percent from 2014 to 2017 — about twice the national rate — and continued to expand at roughly that pace through 2018, according to a report by the Bay Area Council Economic Institute. The region’s gross domestic product, at $748 billion entering 2018, would rank the Bay Area economy as third in the country — behind only Greater New York City and Los Angeles, and ahead of Chicago — and 19th largest in the world, ahead of countries such as Switzerland and Saudi Arabia. On a per-capita basis, our region boasts an estimated GDP of $80,000, about 45 percent greater than the comparable national figure.

The report also states that the Bay Area economy “is remarkably diversified, more so in fact than many of its leading peers,” including New York City and Houston. Industries such as construction, health care, consumer goods and financial services help bolster employment and economic growth in the region.

However, a notable measure of Bay Area growth is fueled by the tech sector. A 2018 Colliers International report shows San Francisco rents have an almost perfect correlation with regional venture funding.

As the tech giants continue to expand as a result of growth, they are absorbing an unprecedented amount of office space. Currently, rents in San Francisco are higher than they were prior to the 2002 tech bubble. While the situation is different today, a crash in rents and per-square-foot sales prices can happen again, just as it did in 2002 and during the recession. If there is a falloff in the technology industry, it will likely lead to a negative impact on both venture-capital funding and Nasdaq index performance, and this market volatility would most certainly have an impact on rent and sales prices.

Will this affect the Bay Area economy as a whole? The answer is a clear and unqualified yes!

We know diversity helps any economy weather these kind of setbacks: When one sector slows, others advance and drive overall growth. It is imperative now that banks maintain discipline in the way they operate. An old saying in the banking industry is, “Bad loans are made in good times.” This is a time to be measured, not a time to take excessive risks.

How does that manifest itself at Bank of Marin? We continue to apply the same standards and discipline to our lending practices that we always have, reflecting both the variety and health of the local economies we serve. Our loan portfolio continues to grow safely across our footprint in the Marin, Sonoma, Napa, Alameda and San Francisco commercial banking markets, reaching $1.73 billion at Sept. 30.

This success is built from the relationships we have with our clients. A true indication of this relationship-banking model is the growth of our deposits, which were at $2.2 billion as of Sept. 30. Over 50 percent of those funds are in demand deposit accounts — primarily, operating cash for our clients’ businesses.

Thanks to consistent loan underwriting, close business relationships with our clients and a solid understanding of our markets, Bank of Marin has a proven history of managing through cycles.

The dynamic and protracted economic expansion that took off in 2010 cannot last forever. Cycles inevitably culminate, and both investors and business owners are wise to keep a cautious eye on possible perils.

Looking ahead, we can all agree a significant issue we face is the lack of affordable housing. However, what I see as a bigger issue is the lack of new housing in general. We need to build more housing so our employees can live in the communities where they work. The trend toward transit-oriented development, which maximizes the amount of residential, business and leisure space within walking distance of public transport, is a good one.

Giving people the opportunity to easily and affordably use public transportation benefits not only our environment and our communities but also local businesses and, most importantly, employees themselves.

With all of this in mind as we head into the new year, we continue to see ongoing vigor tempered by potential downside across the North Bay business landscape. Despite serious setbacks for those affected by the devastating fires in Sonoma and Napa counties, they remain strong and rebuild efforts should help local economies. Loan demand from our broad base of clients remains steady, and business owners are upbeat about their prospects moving into 2019.

So, while we are always mindful of potential risks, we continue to see reason for optimism, mixed with caution, and our outlook for 2019 is good.