Economy is starting to mend; no, really

By BILL VIRGIN
SEATTLE POST-INTELLIGENCER COLUMNIST

Seattle, WA - 6/3/04 - On a clear day, so the Evergreen State political adage goes, you can see all the votes you need to win an election in Washington from the top of the Space Needle.

Apparently, from that same vantage point you can see all the jobs needed to drive an economy -- or, in their absence, create a recession.

In compiling her regular report on the region and the state, Roberta Pauer, an economist with the Employment Security Department, came up with these interesting numbers: Since the end of Washington's recession in June 2003, the state has regained 55,000 of the 84,000 jobs lost during the 30-month recession. The Seattle metropolitan area (King, Snohomish and Island counties) has regained 25,000 of the 95,000 jobs lost in the recession.

If you're fast on your feet at math, you may be musing over two points in that last paragraph: The Seattle area lost 95,000 in the recession. The state of Washington, which includes the Seattle area, lost 84,000 jobs.

Can that be right? How can that be right?

Yes it can be right, and the way it can be right is that the rest of the state (subtracting the Seattle metropolitan area, and no doubt a lot of people would like to do just that) actually added jobs during that period.

But the Seattle area's job force constitutes about half the state's total (three counties, out of 39 total). As goes Seattle's economy, so goes at least the statistical picture of Washington's economy.

There's always been a compare-and-contrast dynamic between the Seattle area and "the other Washington," but never has it been so dramatic as during the recent economic unpleasantness. It actually predates that to the late-1990s boom in which the Seattle area's growth rocketed ahead of the rest of the state.

But as Pauer notes, "You pay for a superheated economy. ... The boom was hotter, and the recession was cooler."

Look at the things that went wrong for the Seattle economy at the turn of the decade: the Boeing bust, and the ripple effects. The collapse in information-technology spending, a broad technology including software, Internet ventures and telecommunications services. The slump in Microsoft options income (by one estimate, at least $30 billion in options income went to Seattle-area employees over a six-year period, with that money invested, spent or funneled into new businesses).

None of which, as it happened, were factors in the rest of Washington. Oh sure, Boeing had plants in Pierce and Spokane counties that cut employment, and surely some of that information technology spending sloshed over. But Boeing and tech spending weren't the dominant factors keeping the economy in the Other Washington afloat.

In fact it's rather remarkable that the Other Washington's job base managed to meander in a narrow range from December 2000 to March 2002, then start climbing, even as it dealt with the collapse of aluminum and the impact of power prices on other industries, not to mention various recurring woes in lumber, paper and agriculture.

So now what? Marie Gunn, president of Bank of America Washington, sees public opinion polling her company participates in reporting more confidence. Business owners are looking for money to spend. "In 2000 and 2001, you didn't see hardly anyone buying equipment," she recalls. Housing developers continue to expect strong demand. Her own company is adding branches.

There's even good news to report in the Seattle area. Boeing seems to have stabilized, and there has been some encouraging news of late on orders. Kenworth Truck Co. plans to hire 250 more workers in order to increase production. If construction ever gets going on the various transit projects, that will pump money into the economy. Development of new office projects in both Seattle and Bellevue is picking up. Initial public offering activity from Washington-based companies is picking up.

Lest we get carried away with unbounded optimism, here are a few things to worry about: Another dry spring and summer could mean more power-rate increases come autumn. Offshore outsourcing will continue to drain jobs in virtually every sector. Reports of large-scale layoffs continue, from 170 at Washington Mutual last week to 70 at Boeing Employees Credit Union yesterday.

One is hesitant to continuously proclaim a coming recovery in the hopes that, like a stopped clock, the forecast eventually will be proven right. Yet, it does appear that the signs of a recovery for the Puget Sound region, and thus the state as a whole, are accumulating. You don't even have to climb down from the top of the Space Needle -- and drive to some other corner of the state -- to spot them.

P-I reporter Bill Virgin can be reached at 206-448-8319 or billvirgin@seattlepi.com. His column appears Tuesdays and Thursdays.