Seattle Bubble

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

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

Entries Tagged as 'job_growth'

Unemployment Reaches Record Levels, But Rate of Increase Slows

By The Tim on April 15th, 2009 at 8:40 AM · 36 Comments

Here’s a chart to help put the latest local unemployment statistics in perspective:

King / Snohomish Unemployment Rate

You can see that yes, unemployment reached yet another record high in March. However, the good news is that the rate of increase in the unemployment rate has slowed significantly.

For the last six months or so the unemployment rate had been jumping by an average of 0.7 percentage points every month. In contrast, from February to March, the Seattle area’s unemployment rate increased by only 0.1 percentage points.

Could this be the first sign that things are starting to level off, or is this just a temporary blip on the way to fifteen or even twenty percent unemployment in Seattle? The next few months should shed light on the situation either way.

Related coverage elsewhere:

Seattle Times: 9.2% unemployment “troubling” for state
Seattle P-I: Washington unemployment rate tops 9 percent
Seattle P-I: UW to eliminate about 1,000 jobs by May 1

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Local Unemployment Nearly on Par with National Rate

By The Tim on March 18th, 2009 at 11:35 AM · 25 Comments

Washington State’s latest unemployment statistics came out yesterday, and King County came in with a staggering 8.0% unemployment rate.

To put this in context, I created the following graph, which charts local unemployment back to 1990 (as far as I can locate data), and compares it to the nationwide unemployment rate as well as “official” recessions as measured by the National Bureau of Economic Research.

National and King County Unemployment

Note that these measures are from the U3 series, which is based on a relatively narrow definition of unemployed persons. The nationwide U6 unemployment rate came in at 16.0% for February. Unfortunately the broad U6 measure does not appear to be available for King County. Hit Wikipedia for more information on the different measures of unemployment.

King County’s rapid increase in unemployment tracks pretty closely to the growth in the nationwide rate, virtually erasing the gap that had grown between the two through 2006 and 2007. With a 1.3-point increase over January, King County’s unemployment rate rose over three times faster than the nationwide rate month-to-month in February. If this rate of growth were to continue, King County unemployment will fully catch up to the nationwide rate this month.

It is also worth noting that the latest unemployment rate for King County absolutely blasted past the peaks that were reached following each of the previous two recessions (6.6% and 6.8%). If past performance is any indication of where we are headed this time, we could easily end up seeing 15% unemployment here in King County before things start to improve.

I hope I’m wrong, but unfortunately there is nothing in the statistics to currently point toward a more optimistic outlook.

Sources:
Recessions: National Bureau of Economic Research
National Unemployment: Bureau of Labor Statistics
Local Unemployment: Washington State Employment Security Department

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Poll: Do you think you will lose your job in 2009?

By The Tim on February 15th, 2009 at 12:05 AM · 22 Comments

Please vote in this poll using the sidebar.

Do you think you will lose your job in 2009?

  • Yes (22%, 54 Votes)
  • No (52%, 129 Votes)
  • Uncertain (26%, 63 Votes)

Total Voters: 246


This poll will be active and displayed on the sidebar through 02.21.2009.

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Local Unemployment Up Again

By The Tim on September 17th, 2008 at 11:39 AM · 35 Comments

The local unemployment rate continues to rise sharply, according to the August data that was just released.

As economic thunderstorms lash Wall Street and soak most of the rest of the country, Seattle and Washington state have managed to stay fairly dry. But beware: The skies are darkening quickly.

Unemployment in Washington state took a big jump last month, more evidence that the local economy is sliding toward recession. And though inflation abated a bit, prices for food, fuel and shelter are still considerably higher than a year ago.

The statewide jobless rate hit 6 percent in August, after adjusting for seasonal variations, versus a revised 5.6 percent in July, the state Employment Security Department reported Tuesday. That was just below the national rate of 6.1 percent.

The last time the state jobless rate was this high was October 2004, when the state was coming out of its last economic downturn. Now, however, unemployment is rising rapidly: As recently as February, the jobless rate stood at just 4.5 percent.

Unemployment also rose sharply in the Seattle metro area, to 4.8 percent from 4.3 percent in July.

Here’s a long-term chart of Seattle-area (King/Sno) unemployment going back to 1990, to provide some context for the latest report:

King / Snohomish Unemployment Rate
Click to enlarge

Unemployment is still relatively low, but the rate is definitely climbing quickly. From December 2000 to March 2002, local unemployment shot up 2.5 points. That’s an average rate of 0.17 points per month. This time around, the rate has gone up 1.4 points so far in the last four months, for an average increase of 0.35 points per month.

In other words, unemployment is rising at twice the rate it did leading into Seattle’s last recession. If this rate of increase keeps up, we’ll hit 7% local unemployment by March.

We’re only four months into the current spike, so I wouldn’t read too much into this data, but it’s certainly not very reassuring.

Source: Workforce Explorer

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Job Growth Turning to Losses, Rents Holding Steady

By The Tim on September 15th, 2008 at 9:25 AM · 57 Comments

Here’s a pair of interesting articles from the Puget Sound Business Journal this weekend.

Puget Sound job growth slowing to trickle

The [Puget Sound] Economic Forecaster, published for the last 15 years and used by companies and governments across the region, is predicting the four-county region will add just 5,900 jobs in the third quarter of this year, boosting employment a fraction of a percent to 1.86 million.

In the fourth quarter, the region is expected to lose 4,100 jobs — a 0.22 percent decrease from the previous quarter — ending the year with employment of 1.856 million.

That’s in contrast to the 2.9 percent annual growth rate in 2007, compared with 2006. The region added 51,500 jobs in 2007. Conway expects a growth rate of 1.7 percent in 2008.

“We’ve seen the economy all of a sudden go limp recently, largely because of the collapse of the housing and credit markets,” said Conway, who also is the senior member of the Governor’s Council of Economic Advisors.

Much of the slowing job growth can be traced to the construction and financial sectors, which have been shedding jobs statewide over the past few months.

I thought our strong local economy was based on Boeing and Microsoft, not this shakey construction and financial stuff that’s been causing so much trouble everywhere else. Well, that’s what they were telling us anyway.

But if you’re a landlord, fear not. “Experts seem comfortable with rent levels.”

Residential Real Estate: Demand from Puget Sound area renters sustains a ‘landlord’s market’

…experts crunching local rental-unit supply and renter-demand projections seem comfortable with the rent levels expected over the coming year or two.

Even with a surge in unsold homes and condos competing in the rental arena, the consensus counts on sufficient rental-minded residents to keep vacancies and rents at landlord’s-market levels.

Residential real estate distress nationwide, in fact, is actually giving something of a boost to the local rental arena, observed veteran rental agent Michael Wilson, broker/owner at Windermere Property Management in Seattle. The relatively healthy local employment scene is still attracting newcomers, he said, “but they’re nervous about buying, so they’re renting instead.”
…
Meanwhile, the Seattle vicinity remains one of the most attractive markets for savvy apartment investors able to identify and provide what renters want today, added Bob Hart, president of Beverly Hills, Calif.-based Kennedy Wilson Inc.’s hyperactive KW Multifamily division.
…
Despite the slightly lower prices investors have been willing to pay for apartment properties here and elsewhere of late, Hart said, it would take a real economic calamity to significantly diminish renter demand.

Oh, good. Luckily, there’s no economic calamity on the horizon, whatsoever. Erm… wait…

(Kirsten Grind, Puget Sound Business Journal, 09.12.2008)
(Brad Berton, Puget Sound Business Journal, 09.12.2008)

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Local Economy in for a “Long Slog”

By The Tim on August 28th, 2008 at 10:34 AM · 40 Comments

Jon Talton wrote a great article for the Times a few days ago that goes deeper than the usual “Boeing! Microsoft! Pink Ponies!” type articles and explores all the ways the Seattle region is exposed to the slowing economy: For local economy, it’ll be a long slog.

…the national slowdown is finally hitting the Puget Sound region, slowing job creation as well as pressuring would-be home-sellers, the construction industry and credit-strapped homeowners.

As recently as last year, employment growth here was more than twice the national average, according to Dick Conway, a Seattle economist and co-publisher of the Puget Sound Economic Forecaster. Now, he forecasts it will decelerate from a peak of 3.2 percent in the first quarter of 2007 to less than 2 percent this year. On a quarter-to-quarter basis, job creation could be essentially flat, something backed up by recent state job numbers.

It’s nice to read a somewhat realistic article once in a while, instead of constantly being fed the feel-good fluff stories about how special and different we are in Seattle.

What are the chances of a state like Washington… avoiding a recession?

…the economic model of Pacific Northwest economies maintained by Jeremy Piger, associate professor of economics at the University of Oregon, showed a 99.4 percent chance of recession for Washington in its latest reading. The model is based on data from the Federal Reserve Bank of Philadelphia.

So you’re telling me there’s a chance… Yeah!

My one problem is that Talton quotes Dick Conway as some sort of expert on the local economy and housing.

“The picture did change substantially with housing,” Conway said. “Ours held up pretty well for a while. We’ve finally succumbed.” Price appreciation has stalled and inventory is swelling as potential buyers try to time the bottom of the already favorable market.
…
Conway compares today’s climate to 2001’s and uses the term “rubber-band effect.” The faster you drop into recession, the faster you bounce out. This has been a slow slide. He said the Puget Sound region may touch bottom in the next few months and begin growing again.

I’m not sure why he would be quoting Dick Conway as any sort of expert, considering how off base he has been with his 2008 real estate predictions so far this year.

Conway anticipates average Puget Sound-region home prices will decline less than 1 percent next year, and sales will be down about 5 percent, before rebounding in 2008.

Let’s see… According to NWMLS July data, “Puget Sound-region” (King, Pierce, Snohomish, Kitsap, & Thurston Counties) average prices are already down nearly 5 percent, while sales are down over 35 percent. Even if you just look at King/Pierce/Snohomish, prices are down over 3 percent and sales have dropped 37 percent.

The bottom line seems to be that the local economy is not bulletproof, despite what the papers and real estate agents have been saying for the last few years.

(Jon Talton, Seattle Times, 08.26.2008)

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