PCEI Talk-three FINAL

8/14/2019 PCEI Talk-three FINAL

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Pierce County Economic Index 2009

Presentation

Horizons2010


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Prepared by

Dr. Doug Goodman, Ph.D.And

Dr. Bruce Mann, Ph.D.

Department of Economics

andCivic Scholarship InitiativeUniversity of Puget Sound


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Special Thanks To:

First Citizens Bank

Puget Sound EnergyRegence BlueShield

Tacoma Public UtilitiesTacoma-Pierce County Chamber


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The Pierce County Economy

High Road Or Low Road

2009-2010Forecast

When you come to a fork in the road,take it.

Yogi Berra

And, we did.Goodman and Mann


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On The High Road:2001 to 2007

A NICE RIDE

Incomes Up

Retailers Selling

Employers Hiring

Homes Selling

Full Employment


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The Road Gets Bumpy:2008 And Beyond

Recession Hits

House Bubble Bursts

Credit Freezes

Oil Price Rises

Spending FallsConfidence Drops


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Pierce County Economic IndexMovin On Up

Pierce County Economy Grows As U.S. Recession Starts

Pierce County Economic Index (1985 = 100)


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Pierce Countys Good Mileage

Military MattersIncreased Troop Levels

Construction Spending

Health Care Sector StrongHospital Construction

Research Activity

Regional Health ProvisionNon-Residential Construction


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2009: U Turn Down

Q1: Down 1.1%Q2: Down 2.8%

Q3: Down 4.2%

Q4: Down 4.3%

A Year of Declines:What A Difference

Continued Decline


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2010: Getting Back On Track

Second Half UphillNational RecoveryHelps End Slump

Q3: Up 1.3%

Q4: Up 2.6%

First Half: DownhillQ1: Down 3.3%Q2: Down 1.1%


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Pierce County Economic Index2000 - 2010

Two Year Decline - Deepest In 30 Years

-3.1% -0.1%


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The Recession: Peak To Trough

Peak To Trough Decline Of 4.9%

PEAK2008 Q3

TROUGH2010 Q1


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The Steep Drive Downhill

Non-Labor Income DownMajor Portion - 30% - Of Local Income

Pensions

Retirement IncomeWelfare Social Program Benefits

Interest Dividend Earnings

Financial Market Collapse Reduced Wealth

Stock Bond Asset Values LostHome Equity Evaporated

Need to Rebuild Values


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Labor Market Activity: Jobs

Employment


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Balanced Labor Market Activity

Demand Up 3.3%

Supply Up 2.2%

UnemploymentStable At 5% - 6%

Employment Growth

Labor Force Growth

Good Tripping:The Drive To

Full Employment


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Employment: 2008 and 2009

2008: Good Start, Weak Close

2% Job Loss In Q4

2009: Jobs Cut, Weak Year

Down 3.1% In First Quarter

Down 4.2% In Second QuarterDown 4.5% In Third Quarter

Down3.7% in Fourth Quarter

A Turn Down


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Employment : 2010

Weak First Half Of 2010First Quarter Down 2.2%

Second Quarter Flat

Stronger Second HalfThird Quarter Up 0.6%

Fourth Quarter Up 1%

The Road Turns Again


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Labor Market Activity: Labor Force

The Supplyof Workers


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Workers Drive To Pierce County

Good Roads AttractNew Workers

In 2008 And 2009Labor Force Up By2.7%

Supply Side Growth


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Labor Force Growth 2010

More ModerateIncreases

Supply Up 2%

Each QuarterOf 2010

Roads StillLook Good


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Why Will Pierce County Attract

30,000 More Workers Between2008 and 2010?

Expanded Military And Dependents

More Diverse Job Opportunities

Increased Labor Market Flexibility

Milder Recession Beginning


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Unemployment: 2008

2007 Record

Low RateEarly 2008 Near

Full EmploymentLevel - 5.5%

Fourth Quarter JumpsTo Over 6.4%

Unemployment MovinOn Up In 2008


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Unemployment: 2009

The Recession Hits

2009 Jumps To 9.5%

Record One QuarterJump

Same As State AndNation

Second Quarter: 9.8%Third Quarter: 9.0%Fourth Quarter: 8.9%

Downhill Is Uphill

2007 2008 2009


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Unemployment: 2010

First Half Of 2010

Labor Force GrowsJobs ShrinkUnemployment Up

Second Half of 2010

Job Growth Rate Down To 8.8%

Jobless Recovery


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Unemployment RateMountain Driving

Unemployment Over9%: 2009 And 2010

More Residents WorkOutside Of County

Employment In CountyDrops To 65%

Hazardous Driving


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Retail Sales


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Retail Sales: Hairpin Turn

2007: Down Hill Growth Stopped In

Second Half 2007 Real Sales: Off 0.5%

2008: Sales Plummet Financial Losses

Matter Spending Down 9%

Reverse Direction


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Retail Sales: 2010Merging Onto Highway

Weak Start StrengthensFirst Quarter: + 0.1%

Second Quarter: + 2.9%

Third Quarter: + 2.5%

Fourth Quarter: + 2.2% Real Sales Still Down Holiday Season Weak

Growth Finally Returns


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Retail Sales: 2004-2010

2008: Lost $525 MillionDown 8.6%

2009: Lost $415Million

Down 7.5%

2010: Up $100 MillionPlus 2.0%

Recession Costly


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Personal

Income

TotalAndPer Capita


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Total Personal Income2000 - 2007

Average AnnualGains Of 6.5%

Real Growth Of3.6%

Good Road

Pleasant Drive

Annual Percent Change


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Total Personal IncomeEffects Of The Recession

In 2008: Up 4.1% Real: Up 0.3%

In 2009: Down 2.8%

$800 Million LossIn 2010: Up 5.7%

Real: Up 1.7%

High To Low To High



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Per Capita Personal Income

2008: Up 3.7% Real: Down 0.1%

2009: Down 3.9% Real: Down 4.0%

Largest Drop In ThirtyYears

2010: Regains 3.0% Real: Down 0.8%

Population GrowthSlows Average Income



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Per Capita Income

2008: $35,040

2009: $33,7002010: $34,700

Recession Effect$400 Lost Since

2008Four Years Of

Lost PurchasingPower Back To2006 Level

Average Income


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Real

EstateActivity


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Housing 2007 - 2008

Not Pretty Picture

2007 Year Gets Worse

Prices FallFinancing Evaporates

2008 Market Weakens

Few Buyers

Less Financing

Double Digit Declines

Steep Downhill


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Housing 2009Moving To The High Road

Smaller Declines

Off 15% In Q1Off 7% In Q2

Off 3% In Q3

Mortgage Window Opens

Federal Assistance

Up 4% At Year End

Turnaround Ahead


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Housing 2010Cruising The Highway

Momentum Builds Early

Prices IncreaseTax Stimulus Helps

Strong First Half

Up 11% Q1

Up 13% Q2

Good Second Half

Up Almost 10% Q3

Up 6% As Year Ends

Smooth Road


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Multi-Family Housing: 2008

On The High RoadStrong Countywide Market in 2008

Fewer Buyers And More Renters MeansDemand Up For Rental Units

Rents Rise

Fewer Concessions

Low VacancyArea Vacancy Near 5%


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To The Low RoadWeaker Countywide Market In 2009

Renters Move To Own

Troop Deployments Reduce Demand

Families Leave Area

Spanaway, UP, South County Softest

Vacancy Up to 8%Rents Stable

Concessions Return


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Continuing DownhillRecovery Weakens Market In 2010

Income Growth

Job Creation

Mortgage Financing

Rents Down

Vacancy UpChallenging Year For Owners


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Commercial Real EstateDriving Downhill

2008 Into 2009Better Than Regional MarketsPositive Absorption

Non-speculative Projects 2010 Significant Softening

Demand ReducedVacancy Increases

Strong Regional CompetitionNew Space Adds To Supply

Retail Real Estate EspeciallyTroublesome

I d t i l S


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Industrial SpaceDriving Into Head Winds

Strong Through 2009Modest Speculative Space

Supply Balanced With DemandDemand From New Tenants:

IKEA, Whirlpool, Green Mountain CoffeeWeakness In 2010

Demand Drops As Trade DeclinesRegional Competition Tough


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Trade And Distribution

Low Tide, Low Water

Global Recession

Anemic Domestic NeedsReduced Military Shipments

Cost Cutting By Shippers


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Port and Trade ActivityChoppy Waters

2007 and 2008: Down 5%2009: Down 20%

One Line Leaves One Line Downsizes

2010: Down 15%Autos and Breakbulk FlatCapital Improvements

Access Environment

(1,000 of TEUs)Recessions Low Tide

PCEI 2007 2010


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PCEI: 2007 - 2010Recession To Recovery

Recession


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Special Thanks To:

First Citizens Bank

Puget Sound EnergyRegence BlueShield

Tacoma Public UtilitiesTacoma-Pierce County Chamber

Documents

PCEI Talk-three FINAL