EVERETT – This will be the best year of the century so far for the Pacific Northwest, the publisher of an economic outlook newsletter said Thursday.
“I’m as optimistic about the Pacific Northwest economy, about the metro area … as I have been in a number of years,” said Michael Parks, editor of Marple’s Pacific Northwest Newsletter.
He added, “2005 will be the strongest year in the last five years.”
Parks spoke Thursday at the annual economic forecast breakfast sponsored by Frontier Bank.
Several factors fuel his optimism, Parks said.
For starters, the depression in Washington’s manufacturing industry is over, he said. Over the past six years, manufacturers shed 100,000 jobs in the state, about half of those in aerospace.
But in November and December, manufacturers started hiring again. Now the sector is growing, Parks said. “We’re going to be positive over the next two or three years.”
The aerospace industry also has emerged from a sharp down cycle, he said. “We’re on the way up in terms of production. We’re on the way up in terms of employment.”
Boeing and its suppliers won’t hire the huge numbers they have in the past, Parks said. “The business has changed.”
State economists project the aerospace work force will grow by 15 percent over the next three years, to 72,000 people. Their paychecks will boost the Puget Sound economy, Parks said. “These are some of the best-paid jobs in the economy, after software.”
And making good news even better, the upswing should last a while, he said. Typically, up cycles in the aerospace industry continue for six to eight years.
Parks said the weak dollar also will help. Its fall in value against the euro and other major foreign currencies makes American-made products more affordable, and that should boost exports for two key state industries – manufacturing and agriculture.
Some businesses – ones that rely on imports – are hurt by the dollar’s drop, but on balance, “there are far more winners than losers in the regional economy,” he said.
Parks said the state’s population is again growing fast, after slowing down in recent years. The growth rate is expected to triple to about 1.5 percent a year over the next three or four years, he said.
That will drive demand for housing and provide new customers for all businesses, Parks said.
For the most part, the new people will come from California and other parts of the United States, seeking jobs at Boeing Co. and Microsoft, which has said it will add staff over the next few years.
It’s hard to say where the new residents will end up, but Parks said in general, people are looking for places where housing costs less and traffic is less congested that in large cities. He said he thinks Spokane and the I-5 corridor south of the Puget Sound metropolitan area are two places that are likely to grow.
Parks also noted that construction industry employment hit an all-time high in 2004, and that Microsoft plans to add 10,000 to 20,000 people to its 30,000-person work force over the next two decades.
There are some potential problems, Parks said, including foreign trade and federal budget deficits and the possibility that the dollar could fall too far, resulting in actions that could drive interest rates up too fast, shutting off growth, particularly in construction.
But, in general, “I tend to hold to the idea that we will muddle through,” Parks said.
Frontier Bank chief executive John Dickson also said he was optimistic about 2005. The bank’s mortgage business continued to be strong in 2004, and in recent months has seen an upswing in small business lending.
“I feel a lot better about 2005 than I did standing before you in 2004,” he told those at the breakfast.
Reporter Bryan Corliss: 425-339-3454 or corliss@heraldnet.com.
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