The Pierce County economy will grow this year, helped by growth in the military bases, at Boeing, in shipping and in the health industry
Job growth in the county will slow down compared to 2012 as college graduates enter the market and discouraged jobseekers who stopped looking renew their search for work.
And the pace of home sales will quicken.
Those are the main predictions for Pierce County’s economy in 2013, as foretold by University of Puget Sound professors Bruce Mann and Douglas Goodman. The economists issued their 25th annual economic forecast during a breakfast at the Greater Tacoma Convention and Trade Center. The Tacoma-Pierce County Chamber of Commerce hosted the event and is the forecast’s sponsor.
This year’s forecast is the last for Mann and Goodman. After a quarter of a century, they are passing the duty to Pacific Lutheran University, as agreed upon with chamber officials.
“When Doug and I presented our first official forecast 25 years ago, we had no idea it would be so well-received by the community,” Mann said. “So we continued with the project and enjoyed it. However, 25 years is long enough for anyone to peer into a crystal ball.”
The economists said the rate of economic growth in ths county this year will be sluggish, as it was in 2012. But they said the county should benefit from “big picture” changes at the national and local levels. The changes include:
* The new Patient Protection and Affordable Care Act, or “Obamacare,” will lead to an increase in federal healthcare funding, buoying Pierce County’s healthcare industry.
* The recent decision by Congress to retain most of the federal tax breaks that were threatened in the “fiscal cliff” negotiations will help maintain consumer and business confidence.
* Federal spending at Joint Base Lewis-McChord to support military members will be strong. Boeing will continue to grow and create jobs and orders for suppliers, and the arrival of a consortium of shippers at Port Tacoma will add jobs and infrastructure.
The general outlook is for Pierce County’s economy to grow 2.8 percent in 2013, a little better than the 2.2 percent growth in 2012 but slower than the 3.6 percent expansion in 2011.
How Congress resolves the remaining “fiscal cliff” federal deficit and debt issues will be critical, according to Goodman and Mann. Almost one-third of local income comes from non-labor sources, and much of it is from Social Security, welfare and military veterans’ benefits. If those payments are cut, consumer spending will decline, the UPS professors noted.
They said Pierce County will gain 5,000 jobs, which at 1.8 percent is slightly slower growth than the 2.1 percent in 2012. Making the job market tighter will be an additional 1,000 people who will be actively looking for employment, including new college graduates. On a related note, Mann and Goodman said the unemployment rate in the county will drop to 7.9 percent this year. It was 8.2 percent at the end of 2012 after being as high as 10.5 percent in 2010.
Mann and Goodman expect consumers to open their wallets, but only a little. The economists predict that retail spending, which increased 4.7 percent in 2012 – faster than inflation – will rise 2.2 percent this year, which is less than the inflation rate. It’s expected that total personal income will grow 5.5 percent in 2013 to a new high of $38 billion, resulting in an average after-inflation increase of 1.3 percent in individual income.
The real estate market looks like a mixed bag. Mann and Goodman say single-family home sales will surge upward 7.6 percent, outpacing last year’s 5.8 percent growth, but demand for condominiums will remain weak. And industrial real estate should continue to be strong, while commercial and office real estate will be weak again and dogged by high vacancy rates in most areas.
According to Mann and Goodman, potential stumbling blocks for the county’s economy include recessions or financial crises in Europe, heavy cuts in federal entitlement program spending, wage pressures, and any rise in interest rates. Such events could hit consumer and business confidence, depressing local markets.
The keynote address at the breakfast meeting in Tacoma that was the venue for the economic forecast was given by Kimberly Harris, president of Puget Sound Energy. She spoke on energy-related issues.