The local economy is creeping, creeping, creeping its way back – back toward some semblance of the good old days of 2007.
At this point, any recovery stands in reference to the last high-water mark, and that was five years ago. Before we reach a brighter future, we have to catch up with our brighter past.
Grant Forsyth, who has studied the regional economy for more than 13 years as a professor at Eastern Washington University and now as the chief economist for Avista, thinks we might be taking steps that direction. In Spokane and Kootenai counties, his forecasting model suggests, 2013 could be the least lousy year in years.
Forsyth produces an annual economic forecast focusing on Spokane and Kootenai counties. He presented his latest report at Greater Spokane Incorporated’s annual Regional Economic Forecast earlier this week.
“It is another year of very little growth,” he said in an interview. “We’ve really had five years now of very little income or employment growth.”
But kernels of long-term good news are beginning to appear: The number of people filing a first-time unemployment claim is down, while the number of building permits for homes is up. Those are leading indicators, Forsyth said – signs of better things to come in 12 to 15 months. It’s part of the reason he thinks 2013 may show real signs of life in terms of jobs and local incomes.
Some highlights from Forsyth’s report:
• The jobless rate is inching downward. In Spokane and Kootenai counties, the combined unemployment rate is dropping from 9.6 percent in 2011 to an estimated 9 percent this year.
• Things are worse in the rural areas surrounding Spokane and Kootenai counties. In the six counties bordering Spokane and Kootenai – omitting Whitman County, which has some unique characteristics – the jobless rate was 12.2 percent in 2011. It’s expected to finish this year at 11.3 percent.
• Next year, employment could rebound more – Forsyth calls for nonfarm employment in Spokane and Kootenai counties to improve 2 percent in the best-case scenario and stay flat in the worst case.
• From 2009 to this year, the number of new claims for unemployment insurance has dropped from around 79,000 to around 30,000. The drop from 2011 to this year was dramatic: 48 percent.
• Households and governments are still cash-strapped, and the two are closely related. Median household incomes in Spokane have dropped by 11 percent since 2004, to just above $40,000.
• After a few years in which spending did not drop at the same rate – due mostly to people taking on more debt to maintain their lives – spending has slowed to match the drop in income. Taxable sales per household in Spokane are down 11 percent since 2004.
• More broadly, over time, people’s incomes are steadily losing ground against inflation. The typical household’s buying power is taking on a distinctly vintage cast; when calculated for inflation, it’s at the same level as in the late 1990s, Forsyth said.
• When spending is down, government revenues suffer. Next year could show progress on this front – with a forecast rise in taxable sales in the city and county of Spokane of a few percentage points.
• Many local companies are healthy. Share prices have rebounded strongly for publicly traded companies such as Key Tronic, Sterling, Northwest Bancorp and others – though some companies continue to struggle.
There is a massive caveat to Forsyth’s forecasts: If we go over the so-called fiscal cliff – the automatic tax hikes and spending cuts set to kick in after this year if Congress and the president don’t craft a compromise – all bets are off. Things will get worse in a big way across the country, as we return to a recession, he said. And things will get extra worse in Spokane because our job market has never rebounded from the first recession, unlike the Puget Sound area.
“It’s so very crucial that the fiscal cliff not happen,” he said. “If the fiscal cliff happens, it’s just going to drive us down to a new, lower level.”
Compared to that, less lousy sounds positively awesome.