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Optimism, but also many ‘what-ifs’ in latest economic outlook

Construction on the new Costco building on West Bakerview Road in Bellingham, Friday, Sept. 2, 2016. The construction industry is an area that’s provided some economic growth in recent years.
Construction on the new Costco building on West Bakerview Road in Bellingham, Friday, Sept. 2, 2016. The construction industry is an area that’s provided some economic growth in recent years. pdwyer@bhamherald.com

There’s optimism about the economy heading into 2017, but it comes with a heightened sense of uncertainty.

A panel of economists at the 27th annual U.S. Bank Economic Outlook Forum saw many things to like about the local, national and Canadian economies, but acknowledged that Donald Trump being elected president adds a bit of a wrinkle into forecasting, given the uncertainty of policy direction at this point. The forum was held Tuesday at the Bellingham Golf & Country Club.

“How do you translate sound bites into policy?” economic forecaster John Mitchell asked during his forecast about the national economy, leaving the question hanging for the 160 attendees to ponder. Mitchell is the former economist for U.S. Bancorp’s western region.

There was some discussion at the forum that Trump’s policies will lead to increased economic activity. Attendees in the room thought so: Among those who answered a business survey, 54 percent said they expected a more favorable business and economic environment as a result of the November presidential election, while 16 percent thought it would be less favorable.

The crowd also appeared optimistic about the upcoming year. The survey indicated 75 percent expect some growth at their company next year; 44 percent expected to hire more workers.

Here’s a look at the economic forecasts for 2017:

WHATCOM COUNTY: ECONOMY TO EXPERIENCE SUBDUED EXCITEMENT

Hart Hodges expects between 2 and 2.5 percent job growth in Whatcom and Skagit counties next year. That’s good, but it won’t feel as good compared to the early 2000s because Seattle’s job and wage growth is expected to be even bigger.

One trend that is expected to continue into 2017 is that economic growth will be stronger in urban areas of Washington state than in rural communities, said Hodges, who is the director at the Center for Economic and Business Research at Western Washington University. Whatcom and Skagit counties tend to be between urban and rural, and both have a different job mix that will mean slower wage growth than King County. Hodges noted that Whatcom County has seen strong job growth in a couple of its bigger industries: construction and manufacturing.

Hodges also talked about how commuting outside the county for work continues to be a growing factor. According to data he compiled from the U.S. Census Bureau, nearly 3,000 Whatcom residents have jobs in Seattle, while more than 1,200 have jobs in Everett and nearly 900 have jobs in Bellevue.

CANADA: BRITISH COLUMBIA LEADING THE WAY IN GROWTH

With confident consumers, a busy real estate market and an uptick in tourism, British Columbia has led Canada in economic growth, said Chris Lawless, chief economist at British Columbia Investment Management Corp.

The weak Canadian dollar has led to a steady increase in U.S. residents visiting B.C., with retail sales also rising in the province. Lawless noted that Canada appears to be past the worst of the oil shock, but oil is expected to remain below $50 a barrel for some time, which means the Canadian dollar should remain between 73 and 77 cents compared with the U.S. dollar in 2017.

U.S.: ECONOMIC GROWTH EXPECTED TO CONTINUE

While it is unclear what kinds of policies Trump will pursue, Mitchell expects the U.S. to continue its long economic expansion. The U.S. recently hit its 90th month of expansion; only three expansion periods since the end of World War II have been longer.

Mitchell predicts a rise in inflation to 2.2 percent in 2017. Lately the pattern has been that the core goods were holding down the overall numbers, something he thinks will soon change.

He also noted that Oregon and Washington state top the nation in terms of job growth in October, but did express concern about what might happen to Washington if there are big changes coming to trade policy from the upcoming Trump administration.

Dave Gallagher: 360-715-2269, @BhamHeraldBiz

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