Seattle Economy Maybe Not So Isolated After All

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Posted by The Tim on October 9th, 2008 at 9:27 AM · 41 Comments

Here are a couple of recent stories to drive home the point that the Seattle area economy is not in fact magically separate from the national/international economy, as some have made it out to be over the last few years.

Brad Wong, Seattle P-I: Tough economy forces cutbacks for area residents

The economic shocks to the nation’s banks, stock markets, credit industry and real estate business have forced Seattle-area residents to review their finances and save what they can.

Thoughts about how to pay for bills — from mortgages and rent to higher food and gas prices — have consumed area residents fearful their quality of life could diminish.

As residents — including those not in immediate dire straits — hatch new plans to weather the turmoil, even young people said they are learning how quickly national problems can affect daily life.

Donna Gordon Blankinship, AP: WA people worried but not desperate about economy

People worried about the economy are more likely to seek help paying their bills or feeding their families than turning to suicide or violence as one man did in Los Angeles this week, mental health experts in Washington state said Tuesday.

“I don’t think the average response to the downturn in the economy is more people thinking of suicide because they can’t pay their bills,” said Kathleen Southwick, executive director of the Crisis Clinic in Seattle.

Southwick said her nonprofit agency’s 24-hour crisis line has not seen an increase in calls these past few weeks, but the “211″ non-emergency line has seen about a 50 percent increase in the number of people calling to find out where they can get help paying the rent and keeping the lights on.
…
The last time the help line saw such a sharp increase in calls was a few years ago “when the tech bubble burst,” Southwick said.

So much for the theory that we’re better prepared to weather the storm than we were when the dot-com bubble popped. Who could have guessed that seven years of pretending everything is fine and that we’re magically immune wouldn’t be enough to stop economic calamity from arriving in Washington State?

Categories: News
Tags: AP, economy, Local Economy, Seattle_is_special, Seattle_PI

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41 responses so far ↓

1 B&W Nikes // Oct 9, 2008 at 9:53 am

Maybe it’s adding insult to injury, but the National Debt Clock in Times Square ran out of digits. Next stop.. quadrillions. How many lattes per person is that?
2 Seattleite // Oct 9, 2008 at 10:15 am

I know I’m feeling it, I’ve had to cut back from three Starbucks Triple Soy Extra Foam Grande Cappuccinos to two a day. Two!
3 Rainy // Oct 9, 2008 at 10:19 am

The Seattle area is not immuned to any downturn in economy either local or national.

But Seattle may be less impacted then other parts of the nation. That point has been made many times on this site.
4 Tyler // Oct 9, 2008 at 10:32 am

Off-topic, but I can’t find it using search: Who was it recently who posted that they bought a lot of EGHT stock? I am curious what the reasoning was behind it….. Thanks.
5 pfft // Oct 9, 2008 at 10:36 am

I still find it odd that people think that the national economy is hurting the great Seattle economy rather than Seattle having all the same problems exhibited in the national economy but on a different time scale.
6 Jana // Oct 9, 2008 at 11:26 am

I don’t know anyone in my day-to-day life who thinks the economic crisis/downturn does not affect us here in in Washington (except maybe Gregoire). Everyone feels it, whether in their workplace as layoffs occur, or in their IRAs and investment accounts. You’re debunking a theory that practically no one believes at this point.
7 David McManus // Oct 9, 2008 at 11:40 am

“You’re debunking a theory that practically no one believes at this point.”

Um, most realtors don’t believe that. This downturn is all caused by media hype and our local economy is STRONG.
8 patient // Oct 9, 2008 at 12:02 pm

The local lies and cheer leading can endup being a double whammy for home debtors in WA.

1. All the people that was fooled by the strong economy, strong immmigration, limited land bs will protect home values which will always go up etc and overspent on the purchases or the helocs will suffer.

2. The same people might not get the bailout money they could have since the idea of WA being special and strong will make the $$$ to be allocated the help to other markets and when it’s WAs turn to really suffer there is no more $$$ left.

Nicely done elected officials, MSM and the re-industry.
9 John // Oct 9, 2008 at 12:06 pm

The Dow just broke 9000 and this mess is far from over.
10 buyStocks // Oct 9, 2008 at 12:13 pm

But Seattle has it’s own DOW though, and were still at 14K right?
11 Jonny // Oct 9, 2008 at 12:22 pm

i think we’ll see 5000-7000 before 2009 is over.
12 Tim // Oct 9, 2008 at 12:23 pm

Home prices are going to be lower in August 2017 than they were in August of 2007.
13 b // Oct 9, 2008 at 1:30 pm

I think its time for a new DOW poll Tim. I am pretty bearish and have been for a while (I moved my 401k into treasuries Nov of last year). However even I /never/ thought we would be at DOW 8500 right before the election. Truly remarkable times right now for the markets and country.
14 The Tim // Oct 9, 2008 at 1:32 pm

Seriously. Holy frig. Exactly one year after the DOW peaked at 14,165, we’re down nearly 40%.
15 patient // Oct 9, 2008 at 1:38 pm

Yep, this one is not a correction it’s a full fledged crash.
16 Slumlord // Oct 9, 2008 at 1:39 pm

I agree that 2017 prices will be lower than in 2007 if you adjust for inflation. The big catch is that the Treasury may debase the dollar in order to screw the countries that we are in debt to. If that happens, there will be the appearance of price inflation while actual assets and the economy are deflating, a scary – but entirely possible – scenario.
17 Markor // Oct 9, 2008 at 1:40 pm

Sniglet’s 80% off prediction for Seattle area house prices is looking better every (trading) day.
18 Markor // Oct 9, 2008 at 1:44 pm

Slumlord, what do you think would happen to US house prices if the dollar was quickly devalued by, say, 50%?
19 ARDELL // Oct 9, 2008 at 1:54 pm

FCK!!! Even though I did predict the DOW would get into the sevens…I’m still saying FCK!!!

I’m not allowed to say FCK on RCG. I said Holy Caboli over there. Thanks for giving me a forum to say it on :)
20 deejayoh // Oct 9, 2008 at 2:00 pm

I think we can kiss the relative stability of the high end of the RE market goodbye after today.

Those people were using stock holdings to buy real estate. Given we are back at 1998 market levels, that equity is pretty much toast.
21 Eleua // Oct 9, 2008 at 2:00 pm

We need more cowbell.

Sniglet is predicting 80% off?!?!!?!?! WOW!

Tim, where do you get these guys? How can anyone rationally think that 80% off the peak price is remotely possible?
22 MarkM // Oct 9, 2008 at 2:03 pm

Very interesting article:

http://online.wsj.com/article/SB122351051370717359.html

one small snippet from it:

All of you who rent — a respectable American tradition — can look forward to buying more cheaply in the future. Take your time.
23 David McManus // Oct 9, 2008 at 2:03 pm

Could anyone have rationally predicted that the DOW would be off 4500 points since June?
24 Eleua // Oct 9, 2008 at 2:05 pm

@David,

Ummm…yes.
25 David McManus // Oct 9, 2008 at 2:14 pm

How come every real estate pro I know is now getting a new position somewhere?
26 patient // Oct 9, 2008 at 2:19 pm

Eleua, 20c on the dollar has been your trademark since day 1. One word comes to mind, respect.
27 The Tim // Oct 9, 2008 at 2:26 pm

Tyler @ 4,

That would be one Ray Pepper.

August 9th: “Im still long 88k on EGHT** PPS avg at 1.05. I still say to the MOON! No dent.. 15 mill in cash……Come on already…I smell 2.00!”

October 6th: “Taking my lumps on my 85k Long of EGHT!! Come on everybody Buy so I can sell!! Good Lord…”
28 ARDELL // Oct 9, 2008 at 2:29 pm

Didn’t everyone see the 20 cents on the dollar home prices in Cape Coral on Nightly News last night? The couple buying that place at 20 cents on the dollar was ecstatic! It was fun watching them be so happy. They were practically pinching one another to test that it was all real.
29 scotsman // Oct 9, 2008 at 3:07 pm

I wouldn’t count on inflation and dollar devaluation to resuce the U.S. from this mess. The minute the .gov starts to print more money with the idea of paying off old debts with new dollars, those who hold the debt will demand higher interest rates to cover the resultant devaluation. You can’t win that game, even by inflating very slowly. The debt holders aren’t dumb, and in some cases they also control our energy supplies in addition to large blocks of our debt. They will get their money back, at or close to real value, or our economy will be slammed into the ground.

Repeat after me: no new taxes, no new spending, cut entitlements, focus on the constitutional minimum for .gov programs, work to grow the economy back as quickly as possible. Then never forget!
30 Curtis // Oct 9, 2008 at 3:33 pm

now microsoft can buy yahoo for half price..
31 Sniglet // Oct 9, 2008 at 3:53 pm

Sniglet is predicting 80% off?!?!!?!?! WOW! How can anyone rationally think that 80% off the peak price is remotely possible?

Actually, I said we would see a minimum decline of 80% from average peak prices in real terms. A 90% drop wouldn’t surprise me in the least.

We are headed for a deflationary depression, and things will get ugly…

http://surkanstance.blogspot.com/2008/09/its-official-depression-just-ahead.html
32 Sniglet // Oct 9, 2008 at 4:09 pm

Tim,

My post vanished again… Has the system decided to declare any post I make with a URL as SPAM?
33 The Tim // Oct 9, 2008 at 4:10 pm

I don’t know why your posts keep getting spam-binned. Unfortunately the comment spam protection doesn’t have a whitelist, otherwise I’d add you to it.
34 Sniglet // Oct 9, 2008 at 4:13 pm

Tim,

Thanks for “unspamming” my posts!
35 Slumlord // Oct 9, 2008 at 5:20 pm

Markor, #18, the dollar cannot devalue by 50% in isolation because it is a floating currency. (The situation would be different, though not necessarily better, if we were still on the gold standard.) There needs to be a corresponding appreciation in the currencies of major trading partners. Right now, this is happening somewhat with the Yen and there is strain between trading partners in the Euro zone.

A sudden calamitous fall in the dollar would cause international trade to freeze up. The second great depression would be on us, and there would be rioting, looting, and havoc on a scale we have never seen before. Unfortunately, this seems entirely possible.

I sincerely hope that the dollar decline continues on an orderly path the way it has for the last several years. Meanwhile, I suggest that this is an excellent time of year to plant potatoes for the next season. It also makes sense to increase your own personal safety by meeting all those neighbors that have previously been worthy of no more than a polite wave as you drive by.
36 Eleua // Oct 9, 2008 at 5:40 pm

The second great depression would be on us, and there would be rioting, looting, and havoc on a scale we have never seen before. Unfortunately, this seems entirely possible.

Would it surprise you if this was a reality before Thanksgiving 2008?
37 Slumlord // Oct 9, 2008 at 6:20 pm

A lot of that depends on what other parties do. Will China participate in the next auction of U.S. treasuries? How far will OPEC decide to go during their emergency session November 18 to prop up the price of oil? Will Germany continue to use their foreign reserves to support the economies of Greece, Ireland, and Italy? Will Russia use the pirated Ukrainian tanks as a pretext for forcing the dispute over a natural gas pipeline into Europe? What impact will the bankruptcy of Iceland — the first sovereign nation to default in modern history — have?

From the U.S. standpoint, will the politicians continue to dither and bailout their campaign contributors, or will they remember why we elected them in the first place, that is to protect the citizens by supporting the productive parts of the economy.

I have no idea what things will look like by Thanksgiving. One thing is certain, they will be different.

To paraphrase Gail the Actuary from theoildrum.com:

–Sometimes the most important events in our lives take place without us even knowing. –
38 Jonny // Oct 9, 2008 at 9:08 pm

“Would it surprise you if this was a reality before Thanksgiving 2008?”

Yes. But falling below DOW 7000 would not surprise me. I think it’s more likely to take months, but it could happen right away since the stock market is forward looking and the future is very, very bleak now.
39 Red // Oct 10, 2008 at 7:52 am

Who is propogating Seattle is Immune? - It is statements like this which have bumped up un-realistic home prices , causing the mess.

I have personally seen Wamu employees in Seattle under great stress. Its bad, but lets accept the fact and try to build the local economy instead of some false hopes/assumptions.
40 David McManus // Oct 10, 2008 at 8:15 am

Who is propogating Seattle is Immune?

Is that a serious question? Or is that sarcasm?
41 Mike // Oct 11, 2008 at 9:49 am

Who is propogating Seattle is Immune? Is that a serious question? Or is that sarcasm?

I think this is a serious question we all need to understand.

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News & discussion about real estate & the housing bubble in the Seattle area.