Pierce County Economy Takes Time to Get Back on the Boil
January 11, 2013
Horizons economic forecast predicts growth at a slightly faster pace in 2013
TACOMA, Wash. – Like a slow cooker turned up a notch, Pierce County’s economy will warm up at a slightly faster pace in 2013, predicts the annual Horizons Economic Forecast for the region. Jobs will continue to expand, though at a slower pace than in 2012, unemployment will be pared back, retail sales will rise modestly, home sales will brighten, and families will have a little more change in their pockets to spend.
University of Puget Sound economists Bruce Mann and Douglas Goodman delivered their 2013 Horizons Economic Forecast this morning before a breakfast crowd invited by the Tacoma-Pierce County Chamber. The event was held at the Greater Tacoma Convention and Trade Center.
This is the 25th year Professors Mann and Goodman have researched the report—and after a quarter of a century, they are passing the honor on to Pacific Lutheran University, as agreed upon with the Chamber.
“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.
Congress’ recent decision to retain most of the federal tax breaks that were threatened in the “fiscal cliff” negotiations will help maintain consumer and business confidence. Expenditure at Joint Base Lewis-McChord, to support the many returning servicemen and servicewomen, will be strong. Boeing too will continue to grow, creating new jobs and more orders for suppliers, and the arrival of the Grand Alliance consortium of shippers at Port Tacoma will add jobs and infrastructure. Some of the major predictions in the 2013 forecast include:
- The Pierce County economy will grow by 2.8 percent in 2013, a little better than the 2.2 percent growth in 2012, but slower than the 3.6 percent growth in 2011.
- 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 nonlabor sources, and much of this is from social security, welfare, veterans’ benefits, and similar. If such payments are cut, consumer spending will decline.
- Employment will grow by 1.8 percent, or about 5,000 jobs, in 2013—less than the 2.1 percent growth in 2012. Making it even harder for jobseekers, more than 1,000 additional people will be actively looking for jobs, as young graduates enter the market and some discouraged jobseekers resume their search.
- 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.
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 keynote address at the 2013 Horizons breakfast was given by Kimberly Harris, president and CEO of Puget Sound Energy. She spoke on “The Changing Landscape for Energy.” The Premier Sponsors of the 2013 Horizons event are Group Health Cooperative, Port of Tacoma, Puget Sound Energy, Totem Ocean Trailer Express, Targa Sound Terminal, and University of Puget Sound. Additional sponsors include Tacoma Public Utilities, Waste Connections, Clear Channel Outdoor, Business Examiner Media Group, Columbia Bank, Pacific Lutheran University, PJ Hummel & Company, and BCRA.
Members of the press can obtain copies of the Horizons 2013 PCEI Report by contacting Shirley Skeel: firstname.lastname@example.org; Tel. 253.879.2611; Cell 510.684.6715.
Businesses and members of the public can obtain copies of the report by contacting Savannah Kimball at Tacoma-Pierce County Chamber: email@example.com; Tel. 253.683.4881
Press Photos of Bruce Mann and Douglas Goodman can be downloaded from: www.pugetsound.edu/pressphotos
Photos on page: Above center: (from left) Pacific Lutheran University President Thomas Krise and PLU economists Neal Johnson and Martin Wurm, Tacoma-Pierce County Chamber President and CEO Tom Pierson, University of Puget Sound economists Bruce Mann and Douglas Goodman, University of Puget Sound President Ronald R. Thomas. (Photo by April Greer); Top right: Tacoma old City Hall tower and Mount Rainier; Above left Douglas Goodman; Above right: Bruce Mann.