"Economic Index for Pierce County Forecasts Continued, if Slower Growth for Area in 2000"

“The Pierce County Economic Index, Horizons 2000, published by the Tacoma-Pierce County Chamber of Commerce, provides an economic forecast for 1999-2000.The Index was authored by Bruce D. Mann and Douglas E. Goodman, professors of Economics at the University of Puget Sound. Mann’s research interests include urban and regional economics; Goodman focuses on finance and applied econometrics.The report asserts that the economic fundamentals of Pierce County are different and stronger than in the past 10 to 15 years, and that the 20th century will end with one of the healthiest economic performances on record for the area.The Index suggests that the economy of Pierce County is more resilient and flexible than it has been, with less dependency on regional events and more responsive to national and international changes. It states the area has the ability to sustain low unemployment without significant labor market problems, and can absorb job growth at a faster rate than in the past.The authors assert the economic slowdown of 1998 allowed the area’s economy to consolidate its gains and solidify its foundation. The report notes that the minor recession forecast for 1998 into early 1999 never materialized, and the momentum of economic growth are expected to continue through this year.The report states that since 1995 local economic growth has annually averaged 3.3 percent, well above the 20-year trend rate of 2.4 percent. Though the economy did slow during 1998, real growth was still 2.5 percent, while the first half of 1999 claimed a growth rate of 5.0 percent, over expectations, according to the Index.The report discusses the strength of the 1999 Pierce County economy that allowed it to continue to grow regardless of Asian economic problems and the loss of a significant portion of the area’s high-tech employment. Even with the lack of good weather during the summer of 1999, the economy continued to grow throughout the year, with an anticipated annual local growth rate of 4.75 percent over the year before.As the Pierce County economy moves into the year 2000, capacity constraints and labor market limitations are anticipated to moderate economic growth locally, according to the Index. It will mean slower growth, however, not a recession or economic downturn. Local growth rates are anticipated to drop to 2.5 percent for the first quarter of the year, slipping to 2.0 percent in the second quarter.The authors concluded that occasional growth slowdowns appear to be part of the new structure of the county’s economy.The Year 2000After slowing during the first half, the Index predicts an acceleration of economic growth in the area throughout the last half of 2000. The report suggests a third quarter annual growth rate of 3.3 percent, climbing to a rate of 3.6 percent in the fourth quarter. Causes for this growth could be linked to the start of major new projects in the area linked to transit infrastructure, urban development, and trade.The year 2000 should end with a rate of 2.8 percent for local economic growth, according to the study. The amount would be under the recent five-year trend, but above the 20-year average. If the predicted rate materializes, it would be the eighth consecutive year of advance for the Index, as well as the fourth consecutive year of above average performance, according to the study.Labor MarketThe Index asserts that the most significant portion of the past five year’s economic growth has been the labor market. With unemployment dropping below 5.0 percent, and an addition of about 6,000 jobs in the county, the indication is the local economy is strong.1999 figures should show job growth of about 2.6 percent, according to the Index, good, but weaker than average. The Index anticipates the year 2000 will begin with employment opportunities growing at a 3.0 percent annual rate through the first half of the year. New firms locating in the urban core, increased employment at distribution facilities at the Port of Tacoma and eastern Pierce County are cited as factors adding to a normal increase in jobs. Total job creation in the year 2000 is predicted to be one of the strongest years on record with a total of approximately 8,600 jobs appearing, pushing the annual rate of growth to just over 3.5 percent.The Index predicts the unemployment rate for the year 2000 to fall into the 4.5 percent range. Seasonal issues are forecast to push unemployment to around the 5.0 percent mark during the winter, with the annual rate evening out at about 4.6 percent.Wage pressures are anticipated to be most noticeable in skilled and professional services, with the possibility for problems mid-year from shortages in those markets.Retail SalesRetail sales in Pierce County are expected to remain strong throughout this year. Sales growth during the past 18 months has exceeded the long-term annual trend of 6.3 percent, according to the Index. Growth in 1998 reached nearly 9.0 percent over the previous year’s figures, with quarterly retail sales moving past the one billion dollar level on a sustained basis in the second quarter of 1998.Growth in retail sales during 1999 is expected to exceed the 1998 level by nearly 7.0 percent. It is expected to continue to rise with an annual rate of 5.25 percent forecast for 2000, strong, but below the long-term trend.Housing & Real EstateWith 1998 as an exceptionally good year for single-family residential real estate sales, a more moderate rate of sales is expected for 1999. Slower growth in sales rates for the year 2000 are expected with first half rates of about 10 percent over last year, and a second half with only about 5 percent growth. The ratio of new homes listed to the number of sales could approach an all time low, possibly discouraging buyers or pushing up prices. The forecast is for a very tight and increasingly expensive housing market, possibly impacting the area’s ability to capitalize on one of its advantages as an attractive area for new economic activity.The Pierce County Economic Index is published by the Tacoma-Pierce County Chamber of Commerce. To obtain a copy of the Index, please contact the Chamber at 253-627-2175.”