Election Section

SAN JOSE — The Silicon Valley looked itself in the mirror Friday, and what it saw was scary. 

By the end of the decade, the heartland of American high technology will have recovered from its devastating economic downturn and be coping with increased population, continuing housing shortages and more traffic. The big question is whether the infrastructure can keep up. 

That was the image projected in a report on demographic trends through the year 2010 released by the Silicon Valley Manufacturing Group at a day-long series of panel discussions held at San Jose State University heavily attended by representatives of non-profit organizations and public agencies. 

Key predictions in the 48-page “Projections 2002: Silicon Valley” report: 

— Population in the Silicon Valley, covering Santa Clara, San Mateo and parts of Alameda and Santa Cruz counties, is expected to jump 13 percent, from 2,771,148 to 3,128,426. 

— Employment will have recovered and there will be almost 1.7 million jobs, an increase of almost 190,000 over 2002 levels that have been impacted by layoffs and business failures costing nearly 100,000 jobs. 

— The number of households will increase 12 percent to an estimated 1,074,942, requiring additional housing in a region already stretched almost to the limit, and the need for affordable housing will be critical. The report estimates nearly 152,000 new homes will be needed by 2010. 

— Traffic will remain stalled. It’s estimated vehicle traffic in the region will increase 20 percent to 40 percent and traffic on the San Mateo and Dumbarton bridges will jump almost 50 percent. While a variety of transportation projects designed to alleviate some of the worst congestion in the country are slated for completion between late this year and 2007, the long-awaited BART extension to San Jose isn’t expected to be operational until at least 2012. 

— The region’s educational system will be severely taxed, with an estimated 650,000 school-aged children by 2010 and enrollments up nearly 5 percent. 

— Strains on power and water systems will increase. The use of recycled water alone is expected to jump from 10 million gallons per day in 2001 to more than 6 billion gallons in 2010. Despite growing conservation, energy demand is expected to increase significantly — although precise projections can’t be made. 

Acknowledging that it’s hard to accurately predict the future, keynote speaker Richard Carlson, president of Spectrum Economics in Mountain View, offered an upbeat peek at what he sees ahead. 

“This economy will revive,” he said. “It’s stalled now but it will revive beginning this fall or early next year, but it will lag behind other sectors by three to six months.” He predicted it will take at least four years, probably five or six, “before we get back where we were.” 

Carlson foresees a slow but steady growth in jobs, and a strong housing market that will show improvement from “ghastly to terrible.” 

“As long as we get a modest economic recovery and interest rates are low, I can’t see any collapse in housing prices,” he said. But commercial real estate is another matter, said Carlson and it will remain in the doldrums for “a long, long time” before it fully revives. 

“We’re in a very special recession,” said Carlson, “an investment collapse recession and there’s a very real risk of deflation. It’s a consumer heaven and manufacturer’s hell.” 

Why the hard times? In part, Carlson said, he thinks Silicon Valley’s suffering is due to the problems of too much money. 

“There’s no limit to sillyness when companies have billions of dollars,” he said.