Horizons Forecast suggests economic clouds might be looming

Tom Layson, host of KBTC’s "Northwest Now," and local economist Neal Johnson of Sound Resource Economics, presented the annual Pierce County Economic Index at the Horizons Economic Forecast Breakfast that drew about 500 business and government leaders. Photo by Steve Dunkelberger
Tom Layson, host of KBTC’s “Northwest Now,” and local economist Neal Johnson of Sound Resource Economics, presented the annual Pierce County Economic Index at the Horizons Economic Forecast Breakfast that drew about 500 business and government leaders. Photo by Steve Dunkelberger

The local economy climbs about 2.5 points each year on the Pierce County Economic Index, a local barometer for the overall health and growth of the region’s various job centers and work industries. That rate of increase, however, might be a bit off the historical average, with just 2.3-point growth by the end of 2019.

The local economy will add about 10,000 new jobs in the coming year, with about a third of them being created in hospitality and transportation industries. The annual PCEI presentation by economist Neal Johnson and KBTC’s “Northwest Now” host Tom Layson at the Horizons Economics Forecast breakfast on Jan. 23 at the Greater Tacoma Convention and Trade Center was filled with statistics and figures as well as a few factoids. One such fact worth noting is that the county is slowly changing from being just a bedroom community for Seattle. Sure, Emerald City refugees are still fleeing rocketing housing prices in the Jet City and finding relative bargains locally. But they are also finding jobs or starting businesses locally rather than battle the congestion of Interstate 5 commuting. One flip side of that trend, however, is that they are now competing for local jobs at a time when employers are complaining about their struggles of finding and keeping qualified workers. Many have long complained about workers not having the “soft skills” for local careers, particularly with work ethics. The county also lags in post-high school graduates, with just 25 percent of its working-age residents having a bachelor’s degree or higher. That’s 6 percent below the national average.

“Skills gaps still exist to some degree,” Layson said to a crowd of about 500 business and government leaders at the event.

That “flight from Seattle” is also driving up housing prices, while wages have largely remained flat, which further puts a squeeze on local workers. At least that trend is showing signs of slowing down from its double-digit price hikes, but the county is still adding more residents than it is building housing for them. That rate is just leveling off into what economists call a “balancing in the market.”

Of course the Puget Sound is the most trade-dependent region of the nation, so what happens around the world or in “the other Washington” affects the local economy as well. National Economic Education Delegation Executive Director Jon D. Haveman played the role of weather forecaster for that section of the event. The forecast calls for at least clouds if not rain since investors are nervous, which creates wide swings in the market. Those swings cause consumer confidence to fall. That fall causes pessimism by producers, and the spiral downward continues. Personal spending is off by $1 trillion, for example. That’s bad. But people are actually saving more, up by 6 percent, rather than spending money they don’t have and building piles of debt. That is good. But household savings is still well below family savings rates found in other industrialized nations. That is bad. But at least people will have something stored for a downturn, when it comes.

“A new recession is coming,” Haveman said, noting that it could be in 2019, 2020 or even later. “They inevitably do.”

It is the 114th month of economic recovery, the longest run on record. A rough Brexit deal between Britain and the European Union, Chinese trade wars and a prolonged government shutdown could dampen things, particularly as the national debt climbs.

“We are in dangerous territory that could go either way,” Haveman said.

The Horizons event comes just days after Workforce Central released its own report on the local job market, stating that 2018 saw solid growth for Pierce County’s economy, with the local unemployment rate at below 5 percent.

Pierce County’s non-government work force stands at 431,506 employees, according to recent employment data. The average annual wage for those workers is $49,996. Average wages per local worker grew by 3.7 percent over the year, while the statewide average wage grew 6.4 percent.

While annual earnings generally jump with more education – about $10,000 a year per level of post-high school learning – one standout fact is how drastic gender factors into wages. A Pierce County woman with some college or an associate’s degree, for example, can expect to make roughly the same as a man with less than a high school diploma. A man with an associate’s degree can expect to make more than a woman with a bachelor’s degree.

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