On the one hand, as we take our regular six-month reading of the regional economy, things aren’t too bad. The recession is over – the economists say it is, anyway. Total non-farm employment for the state is up by 33,300 jobs from a year ago, and the unemployment rate is down by half a percentage point. Even better, companies are reporting increased ordering activity.
On the other hand, what little recovery there was appears to be losing steam. The June report from the state’s Economic and Revenue Forecast Council says Washington’s economy has slowed. That’s reinforced by anecdotal reports from companies who say activity has plateaued or even retreated from late 2010 and early 2011.
On the third hand (now we understand Harry Truman’s desire for a one-armed economist), the state’s biggest economic driver – aerospace – is doing well and promising to do even better. Boeing’s Renton plant now has three separate production-rate increases scheduled for the 737, Everett expects to build more 777s, the Air Force tanker deal will keep the 767 line running and the 787 might finally make it into commercial service. Boeing needs more workers to build those jets.
On the fourth hand, the recession is still reverberating through other sectors. Government at all levels will continue to shed workers as it faces up to the realities of diminished tax-revenue collections. Retailing continues to feel the cumulative impacts of consumers spending power slashed through pay cuts and layoffs. Among those consumers who do still have money and a willingness to spend, shifts in shopping habits (more done online, less in big-box retail chains) will impede hiring and keep many currently vacant storefronts dark for years.
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On the fifth hand (this is starting to sound like a recitation of an evening at the poker table), multiple sectors are doing well. Manufacturing, which didn’t cause the recession but took a hit from it, has rebounded. Technology has done all right. Agriculture, aided by higher commodity prices, has done very well.
On the sixth hand, the housing sector, the true source of the recession, is still ailing. Foreclosures continue, adding to a surplus of properties available for sale and driving down prices. Housing construction (an activity that influences what happens in other sectors, including building-products manufacturing and retailing) is not going to return to anything we’d consider normal until we have more consumer confidence and the inventory overhang is chiseled away.
On the seventh hand, the banking industry appears to have stabilized. The worst of the zombie banks have been closed and the survivors have been able to replenish balance sheets with capital. Banks also say they’re back to lending, especially in the commercial and industrial category.
On the eighth hand (this would work if an octopus had hands and was an economist), bank failures still occur – Washington had two in May. And when it comes to lending, there appears to be a Great Disconnect between what the banks are saying and what business is hearing. Businesses will tell you that access to credit is still a huge problem and threatens to choke what growth opportunities are out there.
What we’ve got, then, is hands down the most sluggish, fits-and-starts, hard-to-read economy we’ve seen – or endured – in decades. For every anecdote or piece of data to suggest the recovery is real and strengthening, there’s at least one to match to indicate if there was any momentum toward a rebound, we’ve lost it.
Which means that any attempt to understand where we’re at and where we might be headed will instead make you want to – wait for it – throw your hands up in the air at the futility of the exercise.
Bill Virgin is editor and publisher of Washington Manufacturing Alert and Pacific Northwest Rail News. He can be reached at firstname.lastname@example.org.