Published March 2004

Economic forecast: job growth expected in 2004

By John Wolcott
SCBJ Editor

There was more good news than bad for a change in the 2004 economic forecast presented by Michael Parks, who sees increasing signs that the long-awaited regional recovery is under way.

Parks, publisher of Marple’s Pacific Northwest Letter, told February’s annual gathering for Frontier Bank’s economic forecast program that total payroll employment in the state should increase by 1 percent this year.

That modest percentage looks more encouraging, he said, when it’s compared to flat job-rate growth last year and a job decline of 2.5 percent in 2002, the worst year of the state’s recession.

“This year we should be creating new jobs at the rate of roughly 500 per week, while in 2002 we were losing 750 to 800 jobs a week. If that pace continues, we could see a doubling of this year’s job growth, to 2 percent, in 2005,” Parks said.

Overall, he predicts a growth in the gross state product numbers, reaching around $225 billion or about 2.25 percent of the national gross domestic product. Manufacturing employment in the state, however, will continue to decline — a shrinkage that began in mid-1998 when the commercial airline industry was declining even before Sept. 11, 2001, he said, but the total unemployment rate in the state should drop in 2004.

One adjustment for the state this year will be getting used to the lessened impact of the Boeing Co. on the state’s economy, he said, noting that “aerospace jobs accounted for about 6 percent of all employment statewide in the mid-1990s” compared to the present 3 percent.

Even so, the future of the Boeing Co. and the related aerospace industry are still important to the state’s economy, the nation’s exports and the Snohomish County economy, he said, adding that the company’s new 7E7 airliner program is expected to provide a significant boost to the local economy in coming years.

“The double-decked Airbus A380, carrying up to 555 passengers, will make its first test flight this year with operating costs 20 percent less than the 747 that first flew in 1969, and Boeing is dealing with being surpassed by Airbus in aircraft deliveries,” Parks said. “But Boeing sees the future as smaller fuel-efficient planes, such as the 7E7, flying more point-to-point routes between cities.

“For most people and most businesses in the state, this year will be better economically, particularly in the second half,” he said. “The financial sector is strong. Banking, insurance, real estate, housing sectors have been adding jobs. I don’t think you’ll see housing prices collapse because the scarcity of land for development will limit the supply.”

New home-building permits are expected to decline 15 percent this year statewide, he said, but “after several years of weakness, the multi-family sector may be up as much as 22 percent.”

Internationally, China is the big story, Parks said.

“It’s a country of 1.3 billion people, the fourth-largest industrial power in the world after the United States, Japan and Germany. Internally, with 20 million Chinese moving from agricultural peasantry to the cities for better jobs, China needs to build the equivalent of a ‘Houston’ every month just to keep up,” he said.

While Washington state’s population is gaining little from either a net gain in births over deaths or from migration into the state — contrary to recent years — the state may pick up “a migration of companies fleeing California’s fiscal turmoil,” Parks said.

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