BELLINGHAM - Next year will be another slow-growth year for the economy, unless the U.S. takes the fiscal cliff plunge that leads to a recession.
That appeared to be the consensus of panelists at the 23rd annual U.S. Bank Economic Forum, held Tuesday, Dec. 11, at Bellingham Golf & Country Club. The forum hosts a panel of four economists who provide forecasts for the national, regional and local economies.
Uncertainty surrounding the federal budget makes it hard to determine what will happen to the economy in 2013.
If no budget agreement is reached by Jan. 1 and the broad spending cuts and sharp rise in taxes take place, it will shrink the economy by 4 percent at a time when it was growing around 2 percent, creating a recession, said John Mitchell, a national economist. He noted that the U.S. is in the tough position of dealing with the short-term problem of economic weakness as well as the longer-term issue of unfunded obligations.
If a deal on the budget is reached before Jan. 1 that doesn't sink the economy, slow improvement combined with low inflation is expected to take place, Mitchell said.
At the local level, the economy is showing mixed signals, said Hart Hodges, director of Western Washington University's Center for Economic and Business Research. One aspect that remains a key part of Whatcom's economy is the Canadian shopper: At the Bellingham Costco, Walmart, Target and other stores, Canadians can represent up to 50 percent of sales. The Costco gas station is among the busiest in the company.
Recently, Whatcom County has experienced job growth in manufacturing and construction, which tend to have higher wages. In King County, much of the growth is in professional services, which also can have high wages. As the job mix changes, the economic ups and downs will impact both counties differently, Hodges said.
Overall, Hodges expects job growth, as well as population growth, to be slow for the near-term.
Perhaps the most optimistic economist on the panel was Michael Parks, who studies state economic trends. The growth of Amazon.com, Boeing, and Eastern Washington farming are all positive trends, he said.
"The hiring and building spree with Amazon and aerospace is creating a vibrancy in the Seattle area, and some of that prosperity will spill out of Seattle," Parks said.
Amazon, for example, has plans to build three high-rise towers in Seattle, and has seen its workforce rise from 43,200 in the second quarter of 2011 to 81,400 in the third quarter of 2012, according to data Parks presented to participants. Revenue for the company has risen from $14.8 billion in 2007 to an estimated $62.1 billion in 2012.
Parks expects Boeing and its suppliers to employ more than 100,000 people in the state in the first half of 2013, up from around 60,000 in 2004.
In Canada, the country's economy continued to perform well but did experience a bit of angst in 2012, said Chris Lawless, chief economist at British Columbia Investment Management Corp. Canada is a big exporter of natural resources and some of the emerging economies, such as Brazil and China, experienced a slowdown, which dampened commodity prices. The once red-hot Canadian housing market began to soften this year, including in British Columbia.
British Columbia's economy is expected to grow about 2.3 percent in 2013, about the same rate as the U.S. economy. The Canadian dollar will continue to be a big factor in whether Canadians continue to flock to Whatcom County retail stores, Lawless said. He doesn't expect upcoming changes to B.C.'s sales tax to have a major impact on shopper's decisions to travel south to shop.
Reach DAVE GALLAGHER at email@example.com or call 715-2269. Visit his business blog online at blogs.bellinghamherald.com/business or get updates on Twitter at twitter.com/BhamHeraldBiz.