The Tacoma-Pierce County Chamber released its economic forecast for Pierce County during a meeting Friday morning at the Greater Tacoma Convention and Trade Center in downtown Tacoma.
The Chamber’s Horizons Economic Forecast breakfast meeting is held annually to unveil the Pierce County Economic Index, which is compiled by local economists Dr. Bruce Mann and Dr. Doug Goodman, professors of University of Puget Sound, and aims to provide an update on the economic well-being of Tacoma and Pierce County for the forthcoming calendar year. The pair has presented the annual report for more than two decades.
During the meeting this morning, which included keynote speaker Kimberly Harris, President and CEO of Puget Sound Energy, Mann and Goodman laid out some of their predictions for the local economy, including:
- The Pierce County economy will grow a little faster in 2013. The economy will expand by 2.8 percent, helped by growth in the military bases, at Boeing, in shipping, and in the health industry;
- Job growth will be slower than in 2012, and it will be more competitive for jobseekers. Jobs will expand by 1.8 percent, less than the 2.1 percent growth in 2012. Plus about 1,000 additional people will be seeking work, as graduates enter the market and some discouraged jobseekers renew their search;
- Home sales will pick up by a healthy 7.6 percent, accelerating the 5.8 percent growth seen in 2012;
- How Congress resolves the remaining “fiscal cliff” federal deficit and debt issues will be critical for Pierce County. Almost one-third of local income comes from non-labor sources, and much of this is from social security, welfare, veterans’ benefits, and similar. If such payments are cut, consumer spending will decline;
- The unemployment rate, which peaked at 10.5 percent in early 2010, will drop from 8.25 percent at the end of 2012 to 7.9 percent by the end of 2013;
- Retail spending by consumers rose by 4.7 percent in 2012, well ahead of inflation. In 2013 it will rise by only 2.2 percent—less than the inflation rate;
- Total personal income will grow by 5.5 percent in 2013, reaching a new high of $38 billion by year end. After inflation individuals on average will have 1.3 percent more income in their pockets than in 2012;
- The housing recovery, which hit a rut in late 2010 and through most of 2011, is back on track. In 2013 the volume of single-family home sales will surge a healthy 7.6 percent. Demand for condominium units will remain weak;
- The outlook for industrial real estate continues to be strong. For commercial and office real estate, it remains weak, with high vacancy rates continuing in most areas.
“When Doug and I presented our first official forecast 25 years ago, we had no idea it would be so well received by the community,” Mann said. “So we continued with the project and enjoyed it. However 25 years is long enough for anyone to peer into a crystal ball. We want thank our sponsors, the Tacoma-Pierce County Chamber, as well as University of Puget Sound and the community, for 25 years of fun and, we hope, some insights.”
Looking ahead in 2013, the economists said the rate of growth will still be sluggish, as it was in 2012. But Pierce County should benefit from some “big picture” changes at the national and local levels. The new Patient Protection and Affordable Care Act, popularly known as “Obamacare,” will lead to an increase in federal health care funding, buoying Pierce County’s sizable health care industry.
Mann and Goodman caution that the economic horizon could still darken. Among the potential threats are: recessions or financial crises in Europe, heavy cuts in federal entitlement program spending, new wage pressures, and any rise in interest rates. Such events could hit consumer and business confidence and depress local markets.
The Pierce County Economic Index was the first index of its kind in the United States, and remains one of only a few econometrically based, local area forecasting models. The research by faculty and students is undertaken as part of University of Puget Sound’s Civic Scholarship Initiative, which partners the university with others in the community.
The complete report is available online here.
More information is available online at tacomachamber.org.