WWU economists look ahead to Whatcom’s post-pandemic economy. Here’s what they see
As we head into uncharted waters of possibly fewer pandemic restrictions and a huge financial stimulus package, Whatcom County’s economy could see some good and not-so-good scenarios in 2021.
Local economists Hart Hodges and James McCafferty hit on a wide range of topics during their annual economic forecast, held Tuesday, March 30, through a Zoom presentation by the Bellingham Regional Chamber of Commerce.
Inflation seemed to be foremost on their minds, given that around $1.9 trillion is starting to be injected into the national economy. Hodges, who co-directs Western Washington University’s Center for Economic and Business Research with McCafferty, is interested in how the federal reserve handles the expected arrival of inflation.
Hodges believes the federal reserve will welcome some sustained inflation, using it to help boost salaries at the low-income levels. However, the economy could overheat if not enough is done to keep inflation in check, creating a host of problems.
McCafferty noted that the way this stimulus package is being handed out could keep the economy from overheating. He expects the benefits of this package to be long-lasting, carrying into 2022. Being spread out over time makes it more like a time-release capsule, he said. The nation’s Gross Domestic Product is expected to jump 4.8% in 2021 and another 3% in 2022, partly because of the stimulus.
As stimulus money arrives and more people get vaccinated, Hodges expects Whatcom County’s economy should see the biggest bounce back in the industries hardest hit by the pandemic, including the leisure/hospitality sector. Not bouncing back right away is the local manufacturing sector, which is still dealing with the loss from last year’s curtailment of the Intalco Works aluminum smelter in Ferndale.
Whatcom County’s retail sector didn’t appear to be hit as hard as feared during the pandemic, according to sales numbers. That’s possibly because businesses were able to successfully pivot as restrictions put in place, Hodges said. However, it may not bounce back as quickly as long as the U.S.-Canadian border remains closed to non-essential travel. While Whatcom County is less reliant on cross-border shopping than in past years, it’s still a significant hit to Whatcom stores, he said.
Job growth usually trails other factors in an economic recovery, and that’s expected to be the case again. New data from Washington’s Employment Security Department estimates Whatcom’s unemployment rate to be 7.3% in February. That’s up from 5.4% in February 2020, right before the pandemic took hold locally.
The local unemployment rate is much higher when people not actively looking for work is factored in. Hodges noted that many parents are not working and not looking, because they are helping their children who are doing remote school work. It could be several years before the number of people working locally is back to pre-pandemic levels.
One other challenging aspect of the local economy going forward is real estate. Inventory remains critically low, which benefits sellers, although it leaves them unmotivated to sell if they want to stay in Whatcom County because they can’t find a place to move to. Rising construction costs, particularly in lumber, is also a factor.
With so many unknowns in the economy, perhaps the situation was summed up best by moderator, and chamber president/CEO, Guy Occhiogrosso, noting that the focus now is getting as many people vaccinated as quickly as possible, then going from there to get the economy back on track.
