Puget Sound Economy Struggles

The Puget Sound region’s economy will continue to struggle forward during the year, Seattle economist Doug Pedersen predicted Wednesday.

“But we will set no speed records,” he said at a Seafirst Bank Forum in Tacoma.

Indeed, Pedersen added, economic growth will be below average for the region and below the comparable U.S. rates.

Continued slowdown in the aircraft industry will hold back local economic growth this year, he said.

“We should see a rebound in aircraft orders only during 1996 and 1997,” Pedersen said. “This downturn has been longer than we have seen in the past in the airline industry.”

The resulting cutbacks at Boeing this year will contribute to weakness in retail sales, he said.

“Apart from the aircraft industry, the regional economy is sound,” Pedersen said.

Two specific factors will help the region to cope this year, Pedersen said: First, the strength of the national economy will provide a strong market for Puget Sound goods. Even though interest rates have risen, the national economy is far from weak, Pedersen said.

Second, the strength of the worldwide economy will mean more exports. Exports form 26 percent of the local economy, and will be boosted by growth in the global economy in 1995 and 1996, Pedersen said.

At the same meeting, John Oliver Wilson, chief economist for Bank of America, Seafirst’s parent company, said the issues facing Congress are so great that gridlock is likely to result for some time.

In the wake of the Republican victory, Congress is debating issues such as government power to change entitlements; rights and obligations in our economy; and the role of government itself. The outcome of this debate will determine American policy for many years to come.

“I will be amazed if we even get a budget this year,” he added. “Who’s running the economy then? It’s the Fed.

“Thank goodness we have a Federal Reserve that is independent to provide a check and balance as we debate our future.”