Tapered, Challenged, and Changed
.
(Does anyone remember Curtis Enis?)
US Bank Outlook Forum
December 9, 2014
Hart Hodges
Western Washington University
Improved National Forecast
•
•
•
•
•
•
•
Less Fiscal Drag
Employment Gains
Net Worth Rebound
Real Disposable Income Rising
Better Balance Sheets
State and Local Finances Better
Housing’s Unsteady Climb
• But!
• Global Growth Worries Intensified-Impacts Through
Trade, Exchange Rates, Interest Rates, Commodity
Prices
Questions & Themes
• Why the continued urbanization?
– “The World is Flat”…
• Related:
– Are we more urban or more rural?
– Structural change, or just delayed growth?
• Getting behind aggregate and average figures
– Population
– Retail sales
Jul-14
Apr-14
Jan-14
Oct-13
Jul-13
Apr-13
Jan-13
Oct-12
Jul-12
Apr-12
Jan-12
Oct-11
Jul-11
Apr-11
Jan-11
Oct-10
Jul-10
Apr-10
Jan-10
Oct-09
Jul-09
Apr-09
Jan-09
Oct-08
Jul-08
Apr-08
Jan-08
Oct-07
Jul-07
Apr-07
Jan-07
Percent
Employment Growth:
• Why the Difference ?
110
105
Seattle
100
95
B’Ham
Mt. Vern
90
85
Oct-14
Jul-14
Apr-14
Jan-14
Oct-13
Jul-13
-6%
Apr-13
Jan-13
Oct-12
Jul-12
Apr-12
Jan-12
Oct-11
Jul-11
Apr-11
Jan-11
Oct-10
Jul-10
Apr-10
Jan-10
Oct-09
Jul-09
Apr-09
Jan-09
Oct-08
6%
Jul-08
Apr-08
Jan-08
Oct-07
Jul-07
Apr-07
Jan-07
Uneven Recovery Across Washington
Employment Relative to Prerecession Peak
4%
Seattle
2%
WA
0%
-2%
-4%
B’Ham
-8%
-10%
Washington highlights:
• Above-average recent growth in key
indicators, including employment,
personal income, auto sales.
• Boeing backlog at nearly 9 years and
still growing.
• Led by Amazon.com, Seattle-area
economy powers ahead.
Copyright © 2014 Michael J. Parks
Key risks for Washington:
• Global economic slowdown that
could erode Boeing’s record backlog.
• Hard economic landing in China,
Japan or Europe, or all three.
• Rising dollar and widened Panama
Canal erode export competitiveness
Copyright © 2014 Michael J. Parks
1,600,000
Seattle
1,300,000
75,000
70,000
1,200,000
B’Ham
1,100,000
900,000
65,000
60,000
55,000
1,000,000
50,000
45,000
Jobs, B’Ham
1,400,000
Jan-90
Dec-90
Nov-91
Oct-92
Sep-93
Aug-94
Jul-95
Jun-96
May-97
Apr-98
Mar-99
Feb-00
Jan-01
Dec-01
Nov-02
Oct-03
Sep-04
Aug-05
Jul-06
Jun-07
May-08
Apr-09
Mar-10
Feb-11
Jan-12
Dec-12
Nov-13
Jobs, Seattle
Looking Back…
95,000
1,500,000
90,000
85,000
80,000
Factors to Consider
• Larger industry trends
• Population
• Number and concentration of jobs in an area
– Agglomeration (place matters)
• Wealth ?
– Mobility
– The freedom/ability to make lifestyle choices
Larger Industry Trends
Two industry sectors accounted for 45.2 percent
of the net job growth over the last two years
• Professional & Technical Services
• Leisure & Hospitality
The geography of this job growth has been
uneven, with significant implications for wage
growth
Nov-13
Dec-12
Jan-12
Feb-11
Mar-10
Apr-09
May-08
Jun-07
Jul-06
Aug-05
Sep-04
Oct-03
Nov-02
Dec-01
Jan-01
Feb-00
Mar-99
180,000
6,500
160,000
5,500
B’Ham
140,000
4,500
120,000
3,500
100,000
2,500
Jobs, B’Ham
220,000
Apr-98
May-97
Jun-96
Jul-95
Aug-94
Sep-93
Oct-92
Nov-91
Dec-90
Jan-90
Jobs, Seattle
Prof and Business Services
9,500
240,000
8,500
Seattle
7,500
200,000
Population
• Variations in population growth in different
regions
• Different regions appear to have different key
cohorts
– 25-34 year olds in King County
– 35-44 year olds in Whatcom County
Variation in Population Growth
Average Annual Percent Change
1980 1989
1990 1999
2000 2009
2010 –
2013
2013
King
1.80
1.59
1.01
1.69
1.84
Skagit
2.16
2.96
1.37
0.49
0.66
Whatcom
1.68
2.93
1.96
0.80
0.69
Immigration and Emigration
Cohort
25 - 29
30 - 34
35 - 39
Etc.
60 - 64
65 - 69
2002
2007
2012
Cohort Differences
47
35-44
45
Million People
43
41
25-34
39
37
35
1990
1995
2000
2005
2010
Jan-14
Apr-13
Jul-12
Oct-11
Jan-11
Apr-10
Jul-09
Oct-08
Jan-08
Apr-07
Jul-06
Oct-05
Jan-05
Apr-04
Jul-03
Oct-02
Jan-02
Apr-01
Jul-00
Oct-99
Jan-99
Seattle
180,000
6,500
160,000
5,500
140,000
4,500
B’Ham
120,000
3,500
100,000
2,500
Jobs, B’Ham
220,000
Apr-98
Jul-97
Oct-96
Jan-96
Apr-95
Jul-94
Oct-93
Jan-93
Apr-92
Jul-91
Oct-90
Jan-90
Jobs, Seattle
Economic trends and demographics
9,500
240,000
8,500
7,500
200,000
Nov-13
Dec-12
Jan-12
Feb-11
Mar-10
Apr-09
May-08
Jun-07
Jul-06
Aug-05
Sep-04
Oct-03
Nov-02
Dec-01
Jan-01
Feb-00
Mar-99
Apr-98
May-97
Jun-96
Jul-95
Aug-94
Sep-93
Oct-92
Nov-91
Dec-90
Jan-90
Jobs, Seattle
6,500
180,000
160,000
5,500
140,000
4,500
120,000
3,500
100,000
2,500
Jobs, B’Ham
Wealth ?
9,500
240,000
8,500
220,000
7,500
200,000
No Recovery in Construction
Govt
Accom
Seattle
Health
Mngt
Prof/Tech
Info
B’Ham
Retail
Mfg
Const
-40
-30
-20
-10
0
10
Percent Change, 2005 - 2013
20
30
40
Where the money is
Thousands
$70
Average annual wage
$65
$60
$55
King and Snohomish Counties
$50
Rest of state
$45
$40
$35
$30
2004
2005
2006
2007
2008
2009
2010
2011
2012
Data: Bureau of Labor Statistics via Washington Economic and Revenue Forecast Council
Copyright © 2014 Michael J. Parks
2013
2014
Wage Growth Depends on Job Mix
Percent of Jobs
King+
Whatcom
Seattle
Wage
Premium
4.5
0.4
$28,500
(48,400 jobs)
(255 jobs)
Retail Salesperson
4.4
5.4
Cashiers
2.4
3.7
Food Prep & Serv (including
Fast Food)
2.2
1.2
Computer Programmers
1.3
0.4
$34,500
Market Research Specialists
1.0
0.3
$25,000
Computer & Info System
Mngrs
0.7
0.2
$46,800
Software Developers,
Applications
Retail
$800
Blaine, Sumas, & Uninc..
$700
(Bellingham)
$600
Million $
$500
$400
$300
$200
$100
$0
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
• Employment – up ~1.5%
– Assuming continued strength nationally with lower oil
prices and other factors (risks to the downside)
– Still trailing Seattle
• Population – slight increase in growth rate (~1%)
• Retail Sales – up 2-3%
– Rising slightly with population and employment; also more
even in distribution
• Unemployment – continued slow decline
• Wages – up 3%
– Assuming stronger job growth in Prof. & Tech Services