The Snohomish County economy is climbing out of a deep hole, economists say, and while it’s possible for it to slip or stumble on the way up, the general outlook is good.
“Six months from now it might be struggling, but I just don’t see it,” said Seattle economist Dick Conway. “The local numbers look good.”
The most recent statistics available show businesses are hiring more, consumers are spending more and the real estate market remains strong in spite of increases in lending rates.
Snohomish County’s jobless rate in March was the lowest it had been since before the September 2001 terror attacks, said Donna Thompson, a labor market analyst with the state’s Employment Security Department. The last time unemployment rates were this low – 5.1 percent – was in June 2001.
Snohomish County businesses added 8,700 workers over the previous 12 months – a sizzling 4.1 percent growth rate – and most encouragingly, “all the sectors were up slightly or stayed even,” Thompson said. Over the past few years, some business sectors have been strong, but employment gains in one area were wiped out by layoffs in another.
There’s been strong growth in high-paying manufacturing jobs in particular. Much of that was spurred by hiring by the Boeing Co. and its other local suppliers, who added 2,300 workers in 12 months.
But manufacturing companies in other industries – including boat builders and electronic equipment makers – have also been hiring, Thompson said.
The newly hired workers have been spending their paychecks.
Taxable retail trade in Snohomish County jumped 5.8 percent in the fourth quarter of 2004, compared to 12 months prior, according to the Washington Department of Revenue.
Most of the increased spending was on basic consumer goods. Spending on big-ticket items was up. Auto dealer sales grew more than 2 percent to $256.1 million, while sales by boat and airplane dealers jumped to $23.8 million from $21.4 million.
But most fourth-quarter shoppers were busy buying gifts for loved ones and items for their homes.
Clothing and shoe store sales shot up 15 percent in the quarter to $80.4 million, the Revenue Department reported. Furniture and appliance sales grew by more than 6 percent, and the category including department and variety stores posted sales growth of about 8 percent.
The numbers suggest the remodeled Alderwood Mall captured a strong share of holiday business. Retail sales in Lynnwood grew roughly 6.7 percent for the quarter.
Building materials and hardware stores sales grew close to 10 percent in the quarter, reflecting the strength in residential real estate.
Snohomish County’s median home prices continued to climb in the third quarter of last year, according to the Washington Center for Real Estate Research. The typical home sold for $256,000, up from $235,000 the year before.
Sales of existing homes grew by about 11 percent, and the county issued 2.5 percent more new building permits.
Historically low interest rates kept the real estate market strong during the recent recession, said Conway, the principal at Conway and Associates, a Seattle consulting firm.
Rates have gone up but still are low compared to historical norms, he said. And now, with more people back to work, more people can afford to buy.
Conway said he expects the real estate market will cool once interest rates climb above 7 percent. But “cool” is relative, he noted. “Even a 10 percent drop in home sales would be about the third-best year on record.”
The economists said the local recovery is tied largely to improving conditions internationally.
Boeing’s hiring has been driven by sales to overseas airlines, Thompson noted. About 84 percent of the announced deals for its 787 have been from foreign airlines.
Likewise, the weak dollar is helping Boeing and other exporting companies sell their products more cheaply abroad, Conway said.
Conway said high gas prices are a potential cause for concern. “You add a dollar to the price of gas and that’s 500 bucks (a year) out the window,” he said. “Five hundred dollars could take a little bit of bite out of the economy.”
There’s likely to be some bumps in the road ahead, Thompson said. Recoveries “aren’t in a straight line.”
Still, the overall outlook is good, she said.
“It’s been a long, slow recovery,” Thompson said, “but we’re still recovering and we’re still making progress.”
Reporter Bryan Corliss: 425-339-3454 or corliss@heraldnet.com.
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