It seems to be a foregone conclusion lately that the US is currently entering recession. Of course, much like the housing market, the some aspects of the economy are local, so we can’t assume that what’s going on nationwide will necessarily hit us here. Following are a couple of articles from the last few days that address the specific question of whether or not the Seattle area is likely to face recession.
Washington CEO: Is Seattle facing a recession?
Technically, no – Seattle isn’t likely to experience actual economic contraction in 2008. But with inflation rising and economic growth slowing, it may feel recession-like in the next couple of months for many in Washington’s business and population center.
First the good news: King County should continue to experience job growth. Boeing and Microsoft both have been expanding, and their most recent quarterly reports indicate this should continue, at least in the near term.
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Now the bad news: Slower economic growth rates may not keep pace with inflation.Consumer prices increased 4.6 percent in the Seattle-Tacoma-Bremerton metro area last year. That’s higher than the CPI increase for United States as a whole, which was 4.1 percent.
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If your paycheck, or sales revenue, isn’t growing that fast, it’s still going to feel like a recession, even if the numbers show slight growth. And make no mistake, while the economy continues to grow, that growth is much slower.
I would be interested to hear a real estate agent’s explanation for how home prices in our area will continue to go up, despite increasingly tight household budgets, still-tightening lending standards, and the death of the “buy now because the market is red hot” mentality. As economic growth slows to below the rate of inflation, I think the top-end scenario for home prices would be that they remain flat. More likely I think that even if Seattle only experiences a “growth recession,” we’re likely to see prices declining at least moderately.
Seattle Times: No equal-opportunity recession
It’s difficult to believe the housing meltdown won’t at least singe Seattle. You can see some of the ashes already in the difficulties at Washington Mutual. Yet the region is in a stronger position than most.
That doesn’t guarantee a downturn won’t be contagious. Anything connected to the housing slump is vulnerable, and a deep trough could cause wider damage. But global demand for Washington products, such as airplanes, software and grain, and strong population growth remain advantages.
The more intriguing question is what happens during and after the downturn. Recessions are transformative events, no less for cities and states than for individuals and companies. They wring out imbalances and create winners and losers, sometimes unpredictably.
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Seattle’s biggest exposure to a downturn may be complacency. Economic memories can be short amid so much prosperity. But it took years for the region to recover from the 2001 tech bust, a mild recession by national measures.
Like others, I question whether we can count on continued strong demand for airplanes and software in the midst of a recession. In fact, it would seem that many of the major products produced by Seattle fall into the “expendable” category when push comes to shove: airplanes, software, online shopping, gourmet coffee…
In the last recession, Seattle was hit harder than many other places. Don’t take my word for it, read this 2002 Seattle Times piece for yourself. Has the economic layout of our area changed in some significant way that will cause the opposite to be true this time around?
(Bryan Corliss, Washington CEO, 02.11.2008)
(Jon Talton, Seattle Times, 02.10.2008)