November 2, 1997 in Nation/World

Plugging Along Still Waiting For Some Puget Sound Prosperity To Spill Over This Way, The Spokane Economy Has Been Unspectacular

Michael Murphey Staff writer
 

While Spokane certainly doesn’t represent an economy in decline, neither does it appear to be an economy headed somewhere with any purpose.

As metropolitan areas around us thrive, Spokane continues to meander in the doldrums.

The last time this pattern was in place, during the late 1980s, Spokane at least had some company in its misery. While Seattle and Portland boomed, the region’s inland economies all lagged.

But this time around, Spokane’s inland rivals, like Boise, are sporting more robust local economies than the Spokane metropolitan statistical area (MSA) has been able to muster.

“It just doesn’t look like it’s happening there yet,” says John Mitchell, U.S. Bancorp’s chief economist and one of the leading experts on the Northwest economy.

The operative word there is “yet.”

Mitchell is mildly surprised that Spokane continues its lack of participation. He is a strong proponent of the concept that as the coastal economies become overheated, the inland economies benefit as companies look for alternatives to the high costs of doing business in the Puget Sound area.

Mitchell looks at Spokane’s employment figures and says, “I’m still convinced this will be translated into an advantage for Spokane, given the tight labor markets elsewhere.”

At least one local economist, Randy Barcus, is not overly concerned.

“I’m still pretty optimistic,” says Barcus, the senior market forecaster for Washington Water Power Co. “I think the economy has evolved almost exactly the way I would have expected. I’m feeling very comfortable about the performance here, and continue to be very bullish on the local economy.”

During the third quarter of 1997, Spokane’s unemployment rate was 4.1 percent, down from 4.6 percent during the third quarter of 1996, and 4.7 percent during the third quarter of 1995.

On its surface, that number appears to depict an area with a tight labor market.

Contrast that picture, though, with the recent opening of Home Depot in the Valley and the opening earlier this year of the Spokane Valley Mall. In neither case were employers expressing concern over any shortage of job applicants.

“Just try opening a big store or a mall here in Portland or Seattle, and you’ll have all kinds of problems finding people to work there,” says Mitchell.

Mitchell suspects there is a relatively large labor pool available here that is not reflected in the unemployment statistics.

For statistical purposes, the labor force is defined as people actively looking for work. Once a jobless person’s unemployment benefits run out, if he or she does not continue to actively seek work through state Employment Security Department channels, they drop off the statistical scope.

What is at work here may be shown in the labor force transitions between August and September. In August, 204,900 people were in Spokane’s official labor force, including 8,100 unemployed. In September, 202,800 were in the labor force, with an identical 8,100 unemployed. On paper, the unemployment rate went down slightly, but that doesn’t mean the community offered more jobs. It means that fewer people were officially looking for jobs.

There’s really no good statistical way of knowing how many people are in that category - “There’s a question of how big this number is nationally,” Mitchell notes - but they likely represent a depth in the local labor pool that many other areas of the region and nation simply don’t have.

“It implies that there are people in Spokane who will come back into the work force when job opportunities are there,” Mitchell says.

While that doesn’t speak well for the current Spokane-area economy, it does mean that as labor markets continue to tighten in the region’s hot spots, more companies will look to places like Spokane for expansion and relocation.

“I was giving a speech in Lynnwood just yesterday,” Mitchell said last week, “and I don’t remember what business the man was in, but he was saying he’s going to have to raise his company’s wages by $2 an hour just to get people to apply.

“When I travel, I’m getting that story almost across the board, and that’s the kind of stuff that’s going to drive things over the East side.”

For the quarter, most local economic indicators depict a region with a relatively static economy. Spokane home sales during the quarter were up slightly, from 1,330 to 1,400, but still lagging 1995’s 1,433 sales.

The number of new construction building permit requests for the third quarter of each of the past three years are nearly identical. But the value of those permits for the third quarter of 1997 is sharply lower than the third quarters of the previous two years.

The decline is in the area of commercial construction.

“The housing numbers are very similar to last year and the year before,” says Bob Eugene, a Spokane city building official, “so the big difference is on the commercial side of the ledger. And the market certainly has been softer than what we normally enjoy.”

Eugene says 1997 is playing out in similar fashion to 1995, when a big rebound during the fourth quarter pulled the year into line with previous years.

He expects the same thing to happen this year.

“We have some excellent projects on the board that we expect to start coming in during the fourth quarter,” he says, “and we expect a good strong first quarter in 1998.”

The permit values in 1996 were skewed by a few major projects during the third quarter, including the new Wal-Mart store and projects at the Spokane Valley Mall.

Barcus, in his role at WWP, pays close attention to the number and value of building permits. He notes that single-family permits were identical quarter-over quarter, and though multi-family permits were down significantly, “that change represents the construction of only one less apartment complex” built in the third quarter of 1997 than in the same period of 1996. That change, he says, is primarily because of overbuilding of apartments in 1996.

For the third quarter, aluminum prices are up over the same period in 1996, meaning better performance for Kaiser Aluminum’s operations here. But the prices still are below their levels in the third quarter of 1995.

Both silver prices and wheat prices are sharply down from the third quarters of the previous two years, though.

Retail sales revenues for the quarter are up slightly from the third quarter of 1996, which in turn showed a small improvement over the third quarter of 1995.

The few numbers available that offer insight on population growth show little change. Slightly fewer out-of-state drivers obtained Washington drivers licenses in Spokane during the third quarter of 1997 than that of the previous year.

Inland Power & Light’s quarter-over-quarter utility hookups showed a slight decline, while WWP hooked up 13 percent fewer electric customers in the third quarter of 1997 than the same period in 1996. WWP’s gas hookups were almost identical from quarter to quarter.

, DataTimes ILLUSTRATION: Graphic: Inland Northwest third quarter economic review


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