For the first three years after reaching the bottom of the Great Recession’s pit, which for our purposes we’ll date as late 2008-early 2009, we scanned the economic horizon in the expectation – or maybe it was just wishful thinking – of a recovery, only to report back in disappointment when one failed to materialize.
Once we realized that we were in fact in the midst of a recovery, as tepid and lethargic as it was, we shifted to scanning the economic horizon in the expectation, or maybe it’s the fear, that the next recession is commencing.
As we take our traditional six-month scan of our economic condition, there’s no shortage of indicators to suggest that pessimism is justified. The stock market’s upward run is well past the average shelf-expiration date for such expansions, and the source of such bullishness has long seemed suspect anyway, given the underlying economy’s sluggish performance.
Energy prices are rising. So are food prices. So are taxes, to judge by the number of governmental entities that have enacted or proposed such hikes. Incomes, however, are not going up at a rate to accommodate the increased demands on paychecks. Some industries, such as retailing, still labor under the twin burdens of the recession and massive permanent restructuring and consolidation courtesy of the Internet.
Interest rates may be going up (although those who rely on earnings from such savings and investments may be grumbling, “about time”), making credit more expensive and threatening to dampen growth.
Not that there’s been a lot of growth to dampen. The latest national numbers say the economy contracted in the first quarter. That’s blamed largely on bad weather, but that excuse works only so long, and if the second-quarter numbers are a disappointment then the economists will have to come up with some other explanation – not that they won’t have plenty of material to work with (see above).
Here in Washington the news is slightly better, emphasis on “slightly.” A recent presentation by the state’s Economic and Revenue Forecast Council notes that the state’s economy “continues to grow, but at a pace lower than the historical average.” Risks include “the potential for slower Chinese economic growth, the anemic recovery in the European Union, and possible disruptions to the housing recovery.”
It hasn’t been all low-growth; in a few sectors the signs of bubbles have appeared, such as in Seattle commercial development, including apartment towers. We all have recent and vivid memories of what happens when bubbles pop. Seattle commercial real estate will continue to do well as long as Jeff Bezos’ seemingly unquenchable thirst for more space for more employees downtown continues. When it doesn’t ...
But then again, we’ve been going on for nearly three years now moping about the weakness and fragility of the recovery and predicting its demise, and it keeps crawling, meandering, inching along.
Maybe that’s as good as we’re going to get. Maybe we’ve been spoiled by the robustness of good times past and guiled into expecting that was the norm. Maybe we should be accepting of, if not exactly thrilled with, what we’ve got – considering the alternative we’ve been expecting.
That forecast council presentation offers this bit of reassurance: “Moderate growth in both Washington and the U.S. is expected through the next biennium. We expect the Washington economy to be slightly stronger than the U.S. economy.” Lest anyone get too giddy over that prospect, the presentation adds that “the level of uncertainty in the forecast remains elevated, with considerable downside risks.”
Truth be told, you don’t have to look hard to find some encouraging signs. Consider manufacturing, a subject area in which your columnist dabbles professionally. Even though aerospace is no longer adding jobs in the state as it was during the recession, it’s down by 2,700 jobs from a year ago, manufacturing as a whole is up by 2,500 jobs from May 2013 to May 2014, according to the preliminary non-seasonally-adjusted numbers from the Employment Security Department.
In keeping with the theme of not letting optimism run away with you, remember that manufacturing employment isn’t back to its 2007 average.
The state and the region have scored some nice wins of late in large-scale in manufacturing, and could be in line for more. That means more manufacturing jobs, more construction jobs, more money into the economy for raw materials, equipment and supplies.
And just maybe a few more years between now and when our worries about another recession become reality.
Bill Virgin is editor and publisher of Washington Manufacturing Alert and Pacific Northwest Rail News. He can be reached at email@example.com.