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The Economy: What’s Happening in the Inland Northwest and When Will It Be Better?

The Economy: What’s Happening in the Inland Northwest and When Will It Be Better? An Economic Overview and Forecast for 2009 by SHAUN O’L. HIGGINS Director, Sales & Marketing, The Spokesman-Review Spokane Valley Chamber of Commerce Mirabeau Park Hotel Spokane Valley, Washington

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The Economy: What’s Happening in the Inland Northwest and When Will It Be Better?

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  1. The Economy: What’s Happening in the Inland Northwest and When Will It Be Better? An Economic Overview and Forecast for 2009 by SHAUN O’L. HIGGINS Director, Sales & Marketing, The Spokesman-Review Spokane Valley Chamber of Commerce Mirabeau Park Hotel Spokane Valley, Washington February 11, 2009

  2. Order of the Presentation Perspective on the Present Situation * A Changing Market: Psychographics and “Animal Spirits” * A Look at Jobs, Income and Housing Trends in the Inland Northwest * 2009 Regional Economic Forecast “ Where angels fear to tread…”

  3. Caveats and Disclosures • I’m a handicapper, not a formally trained economist. . . • I do, however, hang out with economists and try to keep up with the literature! • Listen for “qualifying phrases. I’ll try to signal the most important ones. • The accuracy/inaccuracy of previous forecasts doesn’t mean a thing! • My opinions do not necessarily reflect those of Cowles Company or The Spokesman-Review. • The presentation will last about 25 minutes. There may be time for a few questions at the end.

  4. Sources and Acknowledgments The Economist The Financial Times The Kiplinger Washington Letter Marple’s Business Newsletter The Spokesman-Review The Pacific Northwest Inlander Puget Sound Business Journal The Spokane Journal of Business U.S. Census Bureau U.S. Conference of Mayors Belden & Associates Spokane Regional Convention & Visitors Bureau Greater Spokane, Incorporated

  5. Sourcesand Acknowledgments Washington State Employment Security, Labor Market & Economic Analysis Branch Blue Chip Job Growth Update ,Seidman Center, Carey School of Business, Arizona State University Office of Federal Housing Enterprise Oversight Bureau of Economic Analysis, U.S. Department of Commerce Mayor’s Economic Forecasting Committee, City of Spokane Eastern Washington University Spokane Community Indicators Star USA: Barbara Beddor & Toby Steward Ann Glendening Shawn Shukle Julie Read Barbara Jones Greater Spokane Valley Chamber of Commerce

  6. The Inland Northwest

  7. The Inland Northwest • 23 Counties in Three States • 1,017,200 people (0.34%of U.S. Population) • 36,534 Square Miles • $17.5 Billion in After-Tax Income • $16 Billion in Retail Sales • $19.9 Billion in GDP (0.2% of U.S. GDP) Sources: U.S. Census; July 2007 estimates (latest available); Bureau of Economic Analysis-U.S. Department of Commerce, September 26, 2007 (covering 2001-2005 GDP trends by Metro area; 2007 Demographics USA; Spokesman-Review Market Research, Misha Barbour; derivations and comparatives by Shaun O’L. Higgins 

  8. POPULATION ESTIMATES January 1, 2001-July 1, 2007, Inclusive Area 2001 2007 Change U.S. 283,876,400 301,045,500 6.0 % Idaho 1,315,700 1,472,800 11.9 % Montana 910,000 947,600 4.1 % Washington 5,971,200 6,402,300 7.2 % Spokane 422,200 446,706 5.8 % Lewiston-Clarkston CBSA 58,500 59,600 1.8 % Missoula CBSA 97,100 101,417 4.4 % Coeur d’Alene CBSA 111,600 134,200 20.3% U.S Population has since grown to more than 306 million! Source: US Census Bureau, 2007 (latest available for all data sets). Derivations by SOH.

  9. ESTIMATED MEDIAN HOUSEHOLD INCOME (EBI) 2001-2007 Region 2001 2007 Change U.S $39,129 $41,255 5.4% Idaho $34,806 $37,696 8.3% Montana $30,184 $34,200 13.3% Washington $44,682 $44,523 0.4% Spokane $34,747 $38,051 9.5% Lewiston-Clarkston CBSA $33,458 $35,418 5.9% Missoula CBSA $33,646 $35,707 6.1% Coeur d’Alene CBS $35,250 $36,628 3.9% Source: S&MM Surveys of Buying Power, 2001-2005/American Demographics 2007 Derivations by SOH

  10. Psychographics 1984,1994, 2008 • WORRIERS: From 30% to 30% to 20% • ADVENTURERS: From 26% to 28% to 36% • SEEKERS: From 26% to 22% to 30% • DOERS: From 20% to 20% to 15%

  11. Job-Creation Performance Snapshot November 2008 over November 2007 Non-Agricultural Wage and Salary Jobs Area U.S. Rank ‘08 Rank ‘07 %Change Thousands of Jobs (Growth Rate) Job Growth20082007 WASH16 5 -0.08 - 2,300 2,972.700 2,9750,000 Tri-Cities 12 1 2.02 1,900 95.800 93,.900 Spokane 226 71 -1.31 - 2,900 219,300 222.200 Yakima 121 70 -0.25 - 200 79,900 80,100 IDAHO 47 8 -2.66 -17,600 645,000 662,600 Coeur d’Alene 181 3 -0.86 - 500 57,900 58,400 Boise-Nampa 296 162 -3.15 - 8,.800 270,300 279.300 MT 18 6 -0.20 - 900 446,900 447.800 Missoula 183 218 -0.87 - 500 57,300 57,800 U.S. NA NA-1.47 -2,050,000 137,100,000 139,150,000 On an annualized basis, Spokane employment will be up slightly in 2008 over 2007! Source: Blue Chip Job-Growth Update, W. P. Carey School of Business,, Arizona State University 1/2/2009

  12. 3rd QUARTER 2008 HOUSING PRICE TRENDS (292 U.S. Markets) Area 1 Year 5 Years U.S. Rank ( 1Yr) Since 1980 IDAHO -2.02 % 53.41% 31 245.86% Boise-Nampa -3.98% 50.95% 217 Coeur d’Alene -4.44% 70.02% 198 WASHINGTON -2.13% 56.22% 32 395.12% Spokane -0.70% 62.03% 122 Tri-Cities 4.11% 20.05% 13 Wenatchee - 1.47% 69.17% 150 Yakima 1.27% 33.30% 68 MONTANA 1.00% 52.49% 12 290.64% Missoula -0.72% 43.52% 123 CALIFORNIA -20.27% 24.8% 50 378.35% U.S. -4.00% 28.78% NA 269.40% Source: Office of Federal Housing Enterprise Oversight. Derivations by SOH

  13. 3 KEY POINTS IN THIS 1.Only homes sold since the 3Q/2007 have seen value decline below original purchase price— and not all of them! 2. Few Spokane County homeowners are “UNDERWATER”-- But, about 8% are likely feeling at least a little “DAMPNESS”! 3. In Spokane, this seems to happen about to this degree about once a decade!

  14. Spokane Home Prices/Sales 1999-2008 Year Buyers Median PriceValue 3Q Change 3Q 2008 1999 5,443 $106,800 $193,700 +81.4% 2000 5,324 $105,000 $189,600 +80.6% 2001 5,898 $110,000 $189,400 +72.2% 2002 6,243 $111,500 $185,900 +66.7% 2003 7,218 $119,900 $194,300 +62.1% 2004 7,758 $129,000 $188,900 +46.2% 2005 8,373 $150,000 $186,900 +24.6% 2006 7,792 $175,000 $199.600 + 7.8% 2007 6,935 $185,400 $184,100 - 0.7% 2008 4,911 $184,100 $178,750 (4Q) - 2.9% Total estimated January-December 2008 value decline: -3.4%-3.6 Source: Spokane Association of Realtors/MLS/Rob Higgins. Estimates by SOH

  15. 3rd QUARTER 2008 HOUSING PRICE TRENDS COMPARATIVES: BEST & WORST Swimming MSA1 Year5 Years Austin TX 5.6% 35.3% Augusta GA 5.5% 39.0% Rapid City SD 5.4% 29.7% Houma-Thibodeux LA 5.2% 43.3% Houston, TX 5.2% 27.1% Drowning Vallejo-Fairfield CA -33.3% -5.6% Salinas CA -34.1% -1.8% Modesto CA -36.7% -6.7% Stockton CA -41.4% -15.0% Merced CA -43.3% -15.0% Source: Office of Federal Housing Enterprise Oversight, January 2009. Derivationsby SOH

  16. Executive Summary The recession has arrived in the Inland Northwest . . . . . . but it arrived later here—3rd or 4th quarter 2008, than for the nation as a whole (4th quarter 2007). Though it arrived later, it will not stay longer. There are too many good things in the pipeline here and our strengths are not in the hardest hit sectors of the economy.

  17. Executive Summary To date, the impacts of recession have been milder here than for the nation as a whole. Employment has held a bit steadier in most parts of the region , housing prices are much stabler in most parts of the region. We will continue to be an economic refuge for those seeking to retire and preserve wealth (particularly, we will see growing in-migration from California)

  18. Executive Summary In 2009: More of the same, with gradual improvements on all fronts beginning mid-year, with continuing improvement throughout the year. • Strong dollar will hinder agricultural exports and weaken tourism from Canada. • Inland Northwest will outperform the sstate and nation on most indicators. • Much stronger 4th quarter for Retail (no weather records. Merry Christmas!

  19. Executive Summary Prepare for a strong 2010 KEY EVENTS • National-teams face off in Women’s Hockey • U.S. Figure Skating Championships. • Vancouver Olympics • Infrastructure spending kicks in • Housing prices grow again • Markets, jobs, GDP all growing

  20. “Those who come through this pinch will reap the future.” --Sir Winston Churchill

  21. Thank you! shaunh@spokesman.com

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