South Puget Sound Forecasts2010-2040

October 2010

www.trpc.org

South Puget Sound ForecastsWhere are we today? Where are we going?

• How forecasting is done• Our changing economic base• Pattern of Growth• Long-Term Forecast

How Forecasting is Done• Population growth/decline

comes from– Births– Deaths– In-migration– Out-migration

• Birth rates and death rates change slowly

• Migration is highly variable

Our Changing Economic Base• If Thurston County

were a nation, its GDP (in 2007) would be $8.3Billion

• It would be about the same as Mozambique

• Thurston’s GDP would be about twice the GDP of Guinea

• And we’re gaining on Cambodia

Our Changing Economic Base• State govt

employment growth slowed after Initiative 601

• A recession also slowed the state economy

• Annual growth:1982-92: 4.8% 1992-2007: 1.1%

• State govt jobs lag WA trends by one year

State Govt

WA Empl

Our Changing Economic Base• State government

employment also drops during recessions

• It will grow very slowly when the state-wide economy recovers

• It will continue to lag state-wide trends

State Govt

WA Empl

Our Changing Economic Base• Government has the

most jobs, but its share is falling …faster private sector growth brings diversification

• Government share: 40% in 1970 28% in 2007

• Our model projects more diversification:government share down to 27% by 2030.

Our Changing Economic Base• Thurston County

is increasingly integrating into the Puget Sound economy

• Over ONEMILLION people live within 30 miles of Olympia

• Likewise, there are over ½ MILLION jobs within 30 miles

Our Changing Economic Base• Thurston

County is NOT YET a “bedroom community”

• But outbound commuting is growing…

• And will grow a lot more 0%

10%20%30%40%50%60%70%80%90%

100%

1960 1970 1980 1990 2000 2010 2020 2030

Perc

ent o

f Wor

kers

Thurston Outbound Civilian Commuters

Our Changing Economic Base• Workers

commute both into and out of Thurston County

• Many more commute out than in

• Outbound commuting is growing faster than inbound

OutboundInbound

Net Out

Our Changing Economic Base• Outbound

commuters bring home their paychecks

• Inbound commuters take them out

• The net inflow is over a BILLIONdollars

• Those paychecks bring spin-offs to the local economy

Inflow

Our Changing Economic Base• Think of

outbound commuters like an industry

• They bring more earnings into the local economy than State Government

$0

$500

$1,000

$1,500

$2,000

$2,500

1985 1990 1995 2000 2005

Mill

ions

Value of Paychecks(in 2007 $)

State Govt Paychecks

InboundPaychecks

Our Changing Economic Base• Most outbound

commuters go to Pierce County (2006-08 est. 19,000)

• King County is next (est. 5,100)

• Lewis is third (est. 2,800)

Destination of Outbound Commuters - 2000

Our Changing Economic Base• Inbound commuters

come from many surrounding counties

• The largest share come from Pierce (2006-08 est. 6,700)

• Commuters from Pierce and King combined (est. 8,700) ≈Commuters from Mason, Grays Harbor, and Lewis combined (est. 8,900)

Origin of Inbound Commuters - 2000

Our Changing Population• We grow all the

time, but sometimes fast and sometimes slow

• Growth spurts come and go

0

50

100

150

200

250

300

1970 1975 1980 1985 1990 1995 2000 2005 2010

Thou

sand

s

Thurston Population1970-2010

Our Changing Population• We grow all the

time, but sometimes fast and sometimes slow

• Growth spurts come and go

150,000

175,000

200,000

225,000

250,000

275,000

1990 92 94 96 98 2000 02 04 06 08 10

Detail: 1990-2010

Pattern of Growth• In 2006, the

recent growth spurt was under way.

• Historic patterns suggested it could last a few years.

• Once pent-up demand was met, the growth rate would taper off slowly.

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

1970 1975 1980 1985 1990 1995 2000 2005 2010 2015

Annual Population GrowthThree-year Rolling Averages, 1970-2005

Pattern of Growth

• The growth spurt reached its peak in 2006

• Monthly home sales are still very low, but may have bottomed

Pattern of Growth

• Recovery will be slow

Pattern of Growth

• For the first time since the early ‘80s, Thurston employment is dropping

• OFC projects state-wide employment to bottom out this fall

Pattern of Growth

• Our growth comes from in-migration

01,0002,0003,0004,0005,0006,0007,0008,0009,00010,000

0%10%20%30%40%50%60%70%80%90%

100%

1970 1975 1980 1985 1990 1995 2000 2005

Growth vs Migration Share

Migr % Pop Growth

Pattern of Growth

• NOW, what are the prospects for the immediate future?

• A sharp drop in rate of growth, like in the early ‘80s

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

1970 1975 1980 1985 1990 1995 2000 2005 2010 2015

Annual Population GrowthThree-year Rolling Averages, 1970-2005

Pattern of Growth

• NOW, what are the prospects for the immediate future?

• A sharp drop in rate of growth, like in the early ‘80s

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

1970 1975 1980 1985 1990 1995 2000 2005 2010 2015

Annual Population GrowthThree-year Rolling Averages, 1970-2005

What is the Long-Term Forecast?• The February

2010 forecast reflects the impact of the Great Recession

• It is lower than the last forecast for most of the time horizon

• It is still within the OFM range

• It extends to 20400

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

450,000

1990

1995

2000

2005

2010

2015

2020

2025

2030

2035

2040

Comparison of ForecastsOFM 2007 vs TRPC 2004 and 2010

OFMRange20042010Actual

What is the Long-Term Forecast?

• PSRC forecasts moderate long-term growth for Pierce

• TRPC forecasts a return of rapid long-term growth for Thurston

• OFM forecasts a return of rapid long-term growth for Mason

How Reliable Are the Forecasts?“Backcasting” is used to Predict the Past

How Reliable Are the Forecasts?

• The 1985 and 1989 forecastsaccurately predicted our current population

• But we took a different route to get here

How Reliable Are the Forecasts?

• The forecasts in– 1992– 1996– and 1999did not foresee the 2001 recession

• But we are precisely at the 1992 forecast

• And growth is likely to be close to the forecasts over time

How Reliable Are the Forecasts?

• Every new forecast is like a course correction

• Long-range models cannot predict the timing of recessions or recoveries

• But they are reliable in predicting major trends

• And they can examine “what-if” scenarios

What happens if growth differs from the forecast?

• Each agency updates their county-level forecast every 3-5 years.

• We monitor growth trends annually.

• Growth spurts and recessions are built into the models.

• We allow for periods of high growth, and periods of low growth - and try to forecast the average over five year intervals.

Major Points to Remember• Growth is Cyclical – “This too shall pass.”• Population growth mainly comes from job

growth – either locally, or in nearby counties• The economic role of commuters is huge• Long range forecasting is reliable for

planning purposes

What the Future May Hold

South Puget Sound Forecasts2010-2040