Will Pierce County see economic gains in 2022? Here are some key indicators to watch
The economic success of the year ahead might be determined by how well the local economy rides out inflation, supply chain issues and workforce shortages, among other things.
That’s according to business leaders and economic predictions offered at the 2022 Horizons Economic Forecast for Pierce County, held online again this year in response to the current elevated numbers of Omicron COVID-19 cases in the area.
The event, organized annually by the Tacoma-Pierce County Chamber, is normally held as a breakfast at the Greater Tacoma Convention Center. The 2021 and 2022 versions were broadcast online as a recorded video.
WORKFORCE
Curtis Dubay is a senior economist in the Economic Policy Division at the U.S. Chamber of Commerce and was Wednesday’s keynote speaker. Dubay said nationally he expected inflation, the supply chain and the workforce to sort themselves out this year, but growth for 2021 was significantly set back by both the Delta and Omicron waves after showing signs of a stronger recovery earlier in the year.
“The economy is in good shape. We’re looking for growth to be between 4 and 5% in 2022 and growth to be about 4% in this the first quarter of 2022,” he said, with an estimate of around 7 percent growth for the end of the fourth quarter.
He noted the current workforce shortfall was interconnected to supply chain and inflation as businesses compete to hire and then pass higher wages on to consumers.
“There are now 3.7 million more job openings than there are available workers to fill those jobs,” Dubay said. “This is unprecedented. At most we usually have one available worker for every job opening, so a one-to-one ratio.”
“That is the key issue we need to get resolved right now,” he added. “Hopefully, as the virus wanes ... this is the year that people will be more comfortable going back to work. If the workforce shortage eases, the supply chain will get better and bring some of that pressure down on the inflation (and) make the Fed’s job easier for the remainder of this year.”
Dr. Neal Johnson, president of Sound Resource Economics, offered his annual Pierce County Economic Index report and noted the size of the local labor force fell through 2020 and only partially rebounded in 2021.
Pierce County he estimated, is down between 9,000 and 26,000 workers depending on measurement assumptions. Compared with 2019 levels, the county is also down 12,000 jobs, mainly in hospitality and government sectors.
HOUSING
Housing affordability, Johnson noted, could take some turns in 2022.
“Inventory remains very tight,” he said. “Zillow forecasts a further 12.4% (price) increase in 2022 for Pierce County. I don’t think that price appreciation is sustainable, and I think Zillow’s forecast is too high.”
He said rising mortgage rates would weigh on what people could afford to buy and contribute to a slowdown.
“Barring more federal stimulus payments. I expect incomes to remain flat for 2022. Combined with Zillow price forecasts, the higher and higher mortgage rates, this pushes the affordability index back down to levels last seen in 2008 and low on that affordability index.”
Michael Robinson with Windermere Professional Partners in Tacoma, speaking as part of a local business panel, said as he looked back on 2021, “I would characterize it as the market having a high demand that’s overwhelming our normal supply ... But all combined, it made for a very imbalanced market.”
Robinson said it only took 14 days on average to sell a house in the area in 2021, down 11 days from 2020. Sales were strong across all price points, “but we set a record in sales over $1 million. We sold over 590 units over a million dollars,” a 111% increase over 2020.
Johnson said he is not forecasting a crash.
“I wouldn’t be surprised by a slight pullback based simply on what people can afford for monthly mortgage payments. But you know, no correction like the bubble burst we saw back between 2008 and 2012, where there truly had been a lot of speculative home buying by people who really shouldn’t have qualified.”
LOCAL EMPLOYMENT
Representatives from labor and industry also offered their perspectives, including:
▪ BOEING: Susan Champlain, Boeing’s director of state and local government operations in the Northwest, said the company had spent more than $260 million with about 100 Pierce County suppliers and vendors in 2020.
“While we’re confident our contributions to the local economy will grow in the year ahead, we also realize it will be a few more years before the aerospace industry fully recovers and returns to pre-pandemic levels,” Champlain said.
She noted the company is hiring and needs “thousands of new employees right here in the Puget Sound as our company, our industry and the economy recover from the pandemic.”
Additionally, as of Jan. 1, Boeing employees on leave for temporary special military duty will be eligible for up to two years’ differential pay, up from 90 days. Differential pay covers the difference between a worker’s military pay and their Boeing pay.
“Boeing is making this change to provide our teammates and their families with more financial security as the length and nature of special duty deployments have grown longer over time,” she said.
▪ CAMPFIRE COFFEE: Quincy Henry, co-founder and CEO of Campfire Coffee, noted his company started right along with the pandemic, and while that alone was challenging, climate change and its effects on the industry also were important market forces.
“There’s some opportunity to kind of future-proof our business,” he said. “So we actually invested in a very small project in Hawaii where we could start to grow some other species of coffee plants. So that’s kind of a long-term goal for us ... also to be able to kind of control our own supply chain with the type of coffee that we offer to our customers long term.”
▪ NORTHWEST SEAPORT ALLIANCE: Officials with the Northwest Seaport Alliance described 2021 as the moment ports were hit with consumers’ pent-up demand leading to unprecedented supply chain backups.
NWSA also experienced a record-setting year for noncontainer freight “or what we call breakbulk cargo,” said Tom Bellerud, chief operations officer with the NWSA, the operating partnership comprising the ports of Seattle and Tacoma.
“So, on top of the challenges that we’ve had in the containers, we also have just extreme volumes going on with noncontainer freight as well, which has led us to using up space for that business that might otherwise have been available for container space as well. So we’re doing a juggling act trying to keep everybody happy.”
John Wolfe, NWSA CEO, said: “It was also an exciting time for the Northwest Seaport Alliance because we were able to open Terminal 5 in Seattle — phase one of that terminal — and that added new capacity ... on the heels of in the past years opening a redeveloped Husky Terminal in Tacoma.”
He added, “One of the strengths of our gateway and especially in the South Harbor in Tacoma, we have undeveloped industrial lands where we can put those properties back to use and increase the cargo flow through our gateway.”
▪ WORKFORCE CENTRAL: The agency, whose focus is on increasing access to employment and training services for local job seekers, workers and businesses, acknowledged the new challenge of connecting with potential workers.
“We have to get out of the mindset of we’re dropping off care packages like we’re at war somewhere and it comes out of a helicopter,” said Tamar Jackson, senior director of community engagement for WorkForce Central. “Equity, access, equality, diversity, those are all things that cannot go away.”
Retaining workers means creating conditions where they are able to afford to live and work here.
“We’ve got to be better at making ways for them to live and be a part of this community because there’s so much talent, so much love. ... So 2022 is high expectation. ... What are we going to do better, so we’re not having the same conversation in 2023.”
This story was originally published January 27, 2022 at 5:00 AM.
