OLYMPIA - The good news? Washington's recession ended in July 2009. The bad news? It's hard to tell the state is in recovery because economic growth has been so slow.
That was the sentiment shared Friday by two economists, both mixing the good with the bad, about where the state has been economically and where it is expected to go in the coming years.
Chief revenue forecaster Arun Raha and the state’s chief economist Dave Wallace delivered that message at The Evergreen State College as part of an economic symposium put on by the Labor Market and Economic Analysis department of Employment Security.
Raha joked with the audience Friday that he’s now evaluating the economy “one month at a time” because of the fickle nature of the state’s recovery. “It’s recovering slower than molasses,” he told the audience.
The state’s recovery was under way until the second quarter of the year when the recovery lost steam, likely setting it back until 2013. Segments of the economy could improve before then, Raha said. The hard-hit residential housing market is expected to find its footing about midway through 2011, while the equally hard-hit commercial real estate market is expected to return in 2012.
A number of factors are holding up the recovery, including the fact that during the recession household net worth nationally fell by $18 trillion. Unable to tap home equity, consumers are saving more and spending less, which has stymied a consumer-driven recovery, he said. Credit, too, remains tight for small businesses, which means those businesses are not hiring at the rate they once did.
Wallace offered more “good” with the “bad.”
Current strengths of the national economy include record business profits, a rising stock market and a weak U.S. dollar, which has made the country’s exports more competitive overseas. That’s particularly important to a trade-dependent state like Washington, he said. The state still has its challenges, though.
Seasonally adjusted statewide unemployment is at 9 percent, but the jobless rate in the state, which includes discouraged job seekers, is 17.4 percent, Wallace said. Contributing to that are the number of older workers, ages 45 to 64, who are unable to find work, he said. That demographic makes up about 50 percent of those who have exhausted their jobless benefits, Wallace said.
Still, one region of the state – the Tri-Cities – avoided the recession altogether and continues to grow, likely because of the federal dollars that flow into the area to help fund the Hanford cleanup effort, he said. In Thurston County, state government, the largest employer, had a stabilizing effect initially during the recession, but now has become a drag on the local economy as it sheds jobs tied to budget cuts.
Another bright spot: Statewide job growth is expected in health care, computers and math over the next 10 years, while it will be weaker in construction and production occupations, he said.
Raha, meanwhile, ended his presentation by warning the audience about a possible bubble in gold prices, which have risen to about $1,350 per ounce. If it should burst, investors might flee to the U.S. dollar, thereby strengthening the currency and making Washington’s exports more expensive to overseas buyers, he said.