Cruising the open road: that was the theme of todays breakfast to mark the 17th annual Pierce County Economic Index Report — a forecast of the regional economy compiled by Dr. Bruce Mann and Dr. Douglas Goodman, Professors of Economics at the University of Puget Sound. The report is highly anticipated each year by the regions business leaders.
The event was entitled Cruisin Horizons 2005, its exhibit hall at the Greater Tacoma Convention and Trade Center showcased several classic sports cars, and the breakfast kicked off with I Feel Good by James Brown.
Some of the news, however, was less optimistic.
This was particularly true for the national economic forecast. Merrill Lynch Director and Senior U.S. Economist Kathleen Bostjancic surveyed the economic landscape by debunking several myths about the current U.S. economy.
One myth: dont count the consumer out of the economic recovery plan. We always hear that we are a nation of consumers, Bostjancic explained. But consumers are actually poised for a slower track of spending. She cited a federal deficit that may call for fewer tax cuts from the government as a major impact on consumer spending. We arent forecasting negative consumer spending, she said. But we are forecasting a slow-down of 4-5%, because there is no fresh economic stimulus for individuals.
Other myths: the economy is poised for strong growth; the Fed has more to do; core inflation is set to rise; and the U.S. is currently in a normal economic cycle.
The economy will slow next year, Bostjancic explained. We arent headed back to a recession, but a rosy prospect would be too optimistic.
In contrast, Dr. Mann and Dr. Goodman described a largely optimistic and robust regional economy.
The Pierce County economy turned the recovery from the mild downturn of 2001 into a full-fledged expansion, said Dr. Goodman. The expansion will continue through the second half of 2004, but at a slightly slower pace.
According to the authors, the Pierce County economy is one of the strongest in the region, and its pace has outstripped the national rate.
The authors pointed to the second half of 2003, when Boeing 7E7 work landed in Pierce County, military activity increased, and the economy accelerated to 3% growth, as the stimuli for the countys windfall. This year, the authors reported that growth in the areas of population, high technology, and urban construction built upon that 2003 momentum.
Looking at next year, the authors reported that much of the strength in 2005 will come from three sectors: military, construction, and tourism. Unless the war in Iraq and the search for terrorists come to early conclusions, the authors reported, Pierce Countys military installations will continue to inject significant spending into the local economy. Many local jurisdictions have started to begin major construction projects — from town centers to industrial parks and retail developments. And the new hotel and convention center complex will provide support for an expanding tourist industry.
For a copy of the Pierce County Economic Index Report, contact Sonja Hall at 253.627.2175 or sonja.hall@tacomachamber.org.
