Pierce County economy strongs, says Chamber Study

Tacoma’s stock continues to rise with positive activity in several key economic indices, according to the Tacoma-Pierce County Chamber’s Pierce County Economic Index report given today during the Chamber’s Horizons 2006 forecast event.

Unemployment is headed down and retail sales, personal incomes, and real estate values are headed up. 2006 isn’t expected to be as big a blockbuster year as 2005, but vigorous growth should continue the positive trends, according to Index authors Dr. Bruce Mann and Dr. Douglas Goodman, both longtime economics professors at the University of Puget Sound and seasoned Pierce County economy watchers. They expect the Pierce County economy to expand at an average annual rate of 4.75 percent from 2004 to 2006 – the strongest performance on record over a three-year period.

The health of the area economy is due in part to a base that has become more diverse and resilient, and more dispersed among all parts of the county, according to the 2006 Index. Also noted is that “the institutions to support growth and expansion are healthier than at any other time in the past.” This includes the Port of Tacoma, where cargo traffic has doubled since 1998, and should increase another 50 percent in the next five years.

Overall activity will moderate in 2006 compared to 2005, which posted numbers even better than those expected. “We weren’t optimistic enough,” Dr. Mann said. One sector behind the bump is retail sales, which have risen 8.1 percent in 2005 over 2004, the largest yearly gain seen since the late 1980s. In 2006, sales should increase another 6.6 percent. The Index points out particular strength in the rapidly urbanizing east county area. The moderation in 2006 will give labor markets and investors breathing room, allowing time to make beneficial adjustments since the economy had expanded at an unsustainable 10 percent the last two years.

Along with retail sales, personal incomes have grown significantly. Total income growth in 2005 is expected to come in at 6.6 percent, blowing away the 3.8 percent growth forecasted. Income growth in 2006 should be 5.2 percent. About $1 billion in purchasing power should be added to Pierce County households in 2006.

The housing and real estate sector too shows good signs. Rents have been increasing while vacancy rates have been dropping. The attractive prices available in the Pierce County market continue to attract people and businesses from neighboring communities. In 2006, new multi-family units and industrial real estate should be absorbed with little problem, according to the Index.

In several respects, the Tacoma and Pierce County area is growing at an unprecedented clip. The 2005 Pierce County Economic Index report provides a detailed look at what is behind the boom and at what conditions can be expected in the future.

To receive a free copy, contact the Chamber at (253) 627-2175 or download the full report online at http://www.tacomachamber.org.