Despite Boeing hiring, state economy still stalled

By Michelle Dunlop Herald Writer

The state economy continues to be weighed down by a slack housing market and less demand for construction, despite bright spots in key areas such as aerospace and computer software, the state’s chief economist told lawmakers in Olympia on Monday.

“We’re functioning in a very uncertain economic environment,” Arun Raha, Washington’s chief economist, told members of the House Community Development and Housing Committee during a hearing that was webcast.

Consumer confidence has shown signs of improving, but it’s too early to tell whether that will continue, he said. That’s important because state and local government budgets are tied closely to consumer spending on major purchases like automobiles and homes.

“I still think we are a year to a year and a half away from any positive signs in construction,” Raha said.

The segments of the state economy that are showing positive signs: aerospace, agriculture, computer software and exports.

The Boeing Co. added 8,361 jobs in Washington in 2011, according to a recent update on the company’s website. The company is increasing jet production in the state over the next few years.

“We have some incredible growth opportunities,” Drew Magill, a marketing director for Boeing’s commercial airplanes division, told the legislative committee.

Boeing estimates that airlines around the world will need 33,500 new airplanes over the next 20 years. At the end of 2011, Boeing had a backlog of 3,771 unfilled orders for commercial aircraft. It would take Boeing about seven years to work off that backlog at current production rates, Magill said.

Bill McSherry, of Boeing’s Northwest government operations team, told lawmakers the company still has “lots of needs” in terms of both job training and education. Although the state has made progress increasing short-term training programs, Boeing “has needs throughout the education spectrum,” McSherry said.

Gov. Chris Gregoire wants the state to spend $7.6 million to expand engineering capacity at state universities. She’s also pushing to establish an aerospace research center.

Despite adding jobs in industries like aerospace, the state still has more than 300,000 people who are unemployed, Greg Weeks, director of labor market and economic analysis with the Employment Security Department, told legislators. That’s double the number of jobless in the state prior to the recession.

“This recession is really marked by long-duration unemployment,” Weeks said.

About 40 percent of unemployed people in Washington have been jobless for six months or longer. Weeks doesn’t predict a return to pre-recession employment levels in Washington through 2013.