By Bryan Corliss
Herald Writer
The most-current economic data available shows Snohomish County clearly had slipped into a recession before layoffs at the Boeing Co. started last winter.
It might take a Boeing rebound to pull the region all the way back, economists said.
“It’s unclear to me what’s next,” said Dick Conway, an economic forecaster at the University of Washington. “I have some questions as to how strong our (regional) economy is going to be in the next few years.”
Retail sales data collected in the third quarter of last year by the Washington Department of Revenue shows business was down in both Snohomish and Island counties compared to the year before.
Snohomish County’s taxable retail sales fell 1.2 percent compared to the third quarter of 2000, from $2.02 billion to $1.99 billion. Island County recorded a drop of 4.3 percent, from $151.1 million to $144.5 million.
And data collected by the Washington Center for Real Estate Research shows that the housing market also was cooling noticeably during the fourth quarter, the most recent period for which figures are available.
Snohomish County building permit totals fell 27.5 percent from the same period of 2000, according to the center, which is based at Washington State University. Island County registered an increase of 8.5 percent.
Snohomish County saw existing homes sales drop 6.7 percent, the center reported. Island County’s total was down about 10 percent.
The housing market did provide a measure of good news, despite the downward trend.
“It’s been a little bit of a surprise for all of us,” said Roberta Pauer, an economist with the Washington Employment Security Department.
The sector as a whole has continued to be stronger than expected and prices have held firm, Conway said.
Snohomish County’s median home price climbed 8.4 percent in the fourth quarter, the real estate research center reported. Island County’s median increased 6.3 percent.
The busy real estate market spilled over into other economic sectors.
The Revenue report shows that in the third quarter, building material and hardware sales increased 3.3 percent. Within that sector, lumber store sales jumped 16 percent.
That’s all changed. Joost Douwes, general manager for Chinook Lumber, said the construction slowdown has hit home at his three stores in Monroe, Snohomish and North Bend. He estimated business, which comes from both contractors and do-it-yourselfers, has been down by about 5 percent compared with last year.
“When Boeing gives out layoff notices three or four months in advance, those workers cut up their credit cards and stop spending money,” he said.
A breakdown of the reports shows an area bracing for a downturn even before the Sept. 11 terrorist attacks set the economy in a tailspin.
“This is a bona-fide recession. You can see it from the numbers,” said Pauer.
One of the tell-tale signs: Sales of new and used cars were down 4.4 percent during the third quarter, while automotive repair businesses saw an 11.6 percent increase, according to the Revenue Department.
That’s a pretty classic pattern, said Doug Russell, the manager of Elliott Tire &Service Centers on 128th Street SW in south Everett. Even if it costs $1,000 a year to keep an old car running, that’s still cheaper than a new car.
But the pattern changed after Sept. 11, Russell said. Auto manufacturers pushed zero-interest-rate financing deals that made new car sales soar.
And about the same time, Boeing started sending out 60-day layoff warnings. Since then, car owners have put off as much maintenance work as possible, he said.
“People are not spending a lot of money on their cars, period,” Russell said.
Tourism also slumped. The Department of Revenue report shows that Snohomish County hotel and motel receipts fell more than 7 percent.
Since then, it’s been hit-or-miss for Snohomish hoteliers.
“We saw quite a bit of a drop since Sept. 11, and it’s definitely down from last year at this time,” said Cassandra Gossler, office manager at the Marina Village Inn of Everett.
At the Crossroads Inn in Arlington, general manager Dan Viner said business has been “a little slower” than last year. But Everett’s Howard Johnson Plaza Hotel reported better business in 2002 so far than last year.
The national economy seems to be recovering from last year’s tech bust, which sent the United States into a brief recession, Conway said.
But locally, it’s going to be awhile before things turn around, Pauer said.
Snohomish County residents were among those who lost their jobs when Eastside technology companies went under, she noted. And Snohomish County investors also lost millions in paper wealth when the stock market faltered.
The lost technology jobs left the area particularly vulnerable to Boeing’s layoffs, Pauer and Conway both noted. And we haven’t seen the last of those layoffs.
“Our economy’s going to be slower off the mark because we’re still struggling with the Boeing downturn,” Conway said. “If the Boeing layoffs end sometime in the middle of the year, that’ll be the bottom. That will put us six months behind the U.S. (recovery).”
Boeing will be a brake on any Snohomish County recovery, Pauer said.
She said she doesn’t project a turnaround for the jet builder until late 2003. That means Snohomish County will lag behind the rest of Puget Sound, just as the region itself is lagging behind the national recovery, she said.
Conway said there’s a chance the recovery will be weak locally. A lot depends on the tech sector, and Conway said he has his doubts about it.
Pauer disagrees. She sees long-term growth, fueled by an aerospace recovery in 2004-05 and a return of technology jobs at a more-sustainable level.
These are high brain-power jobs that sell products and services all around the world, she said. “We’re very well positioned in the worldwide markets to take advantage of that.”
Herald writer Eric Fetters contributed to this report.
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