Regional economy will stay robust

The Inland Northwest economy will cool a bit in 2007, but will still outperform the rest of the nation, a pair of economists told more than 400 community leaders at an annual economic forecasting meeting Thursday in Spokane.

“We’re in an aging decelerating upturn,” joked U.S. Bancorp economist John Mitchell. He and Eastern Washington University economist Grant Forsyth delivered their predictions at a gathering hosted by the Spokane Regional Chamber of Commerce.

The two agree converging pressures rippling through the national economy are bound to affect everything from Inland Northwest real estate to retail trade – but to a lesser extent than most other regions will experience.

“We’re not immune to the national cycle,” said Forsyth.

Yet Spokane and Kootenai counties, like much of the West, will continue to enjoy growth — it will just be slower than in 2006, said Forsyth.

“In 2007, we can expect the rate of growth of existing home prices in the single-digit range, not the double-digits we experienced in 2004 and 2005,” he said.

Homes in the two counties will likely appreciate about 8 percent next year, down from the 18 percent in 2006.

“It’s still a pretty robust housing market,” Forsyth said, “well above the rate of inflation.”

Mitchell estimates 810,000 new jobs will be created in the West next year. The Inland Northwest should see job growth of around 2.5 percent, down from 3.3 percent this year but more than twice as strong as the 1.1 percent predicted for the rest of the country, said Forsyth.

Meanwhile, a population explosion in Spokane and Kootenai counties is significantly outpacing the 1 percent national average.

Kootenai County’s population climbed just over 4 percent in 2005 — the most recent year for which figures are available — and Spokane added nearly 2 percent more people in 2006.

“I expect this is going to continue for at least the next five years,” said Forsyth.

Even more remarkable is Liberty Lake’s more than 10 percent population gain, followed by more than 8 percent in Post Falls and nearly 7 percent in Hayden, he said.

“City fathers will tell you: ‘That’s not the kind of growth you manage, it manages you,’” Forsyth said. “At those rates, populations would double every ten years. Because of the power of compounding, it has potentially larger impact than you might think for the aquifer and resource use.”

Meanwhile, Spokane County retailers could enjoy sales increases approaching 6 percent to 7 percent next year — well above inflation but below 2006’s double-digit growth.

A look back, Forsyth said, showed market values of the region’s publicly-traded companies have soared 200 percent since 2002, thanks to substantial gains by banks and mining companies. And despite a dismal 2004, the combined operating margins for the area’s five largest hospitals total between $5 million and $10 million each quarter.