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Pierce County Economic Index 2006 Presentation

Pierce County Economic Index 2006 Presentation. Horizons 2007. Prepared by Dr. Doug Goodman, Ph.D. And Dr. Bruce Mann, Ph.D . Department of Economics University of Puget Sound. Special Thanks To:. LandAmerica Commercial Service Port of Tacoma Puget Sound Energy Regence BlueShield

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Pierce County Economic Index 2006 Presentation

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  1. Pierce County Economic Index 2006 Presentation Horizons 2007

  2. Prepared byDr. Doug Goodman, Ph.D.AndDr. Bruce Mann, Ph.D.Department of EconomicsUniversity of Puget Sound

  3. Special Thanks To: LandAmerica Commercial Service Port of Tacoma Puget Sound Energy Regence BlueShield Tacoma-Pierce County Association of REALTORS Tacoma Public Utilities Venture Bank Tacoma-Pierce County Chamber

  4. Four Years of Strong GrowthThe Mystery to Explore 4.0% Pierce County Economic Index 2.8% 2004 – 3.2% 2005 – 6.3% 2006 – 3.9% 2007 – 3.0%

  5. Above Average Growth Pierce County Economic Index Average = 2.98%

  6. A New Modus Operandi? 1990-01 1997-98 2000-01

  7. Recession to Recovery to Growth • 2001 Mild Slowdown • 2002 No Growth • 2003 Recovery • 2004 Expansion • 2005 Strong – 6.3% A Brief History

  8. A Solid 2006 Slower But Good • First HalfUp 4.5% • Third Quarter 3.5% • Fourth Quarter3.0% • Above Trend Growth Rate

  9. 2007: Remaining Strong Stable Growth • First QuarterUp 2.9% • Second Quarter Up 2.9% • Third QuarterUp 2.9% • Fourth QuarterUp 3.1% • For the YearUp 3.0%

  10. Searching for an Explanation:The Evidence • Recovery • Mild and Shallow Slowdown • Solid Economic Foundation • Housing and industrial Real Estate • Spending and Employment Strong • Housing Expenditures • Military and Related Spending

  11. Searching for an Explanation:The Evidence • Strong and Growing Regional Sectors • Aerospace – Boeing Related • Technology – Recovery of Dot Coms • Warehouse and Distribution – Port • Biotechnology • Tourism and Conventions • Urban Centers

  12. Pierce County Unemployment: 2003-2007 Up and Down • Downturn Ups Rate to 8.3% • Drop to 5.5% in 2004 • 5.5% Range for 2006 and 2007

  13. Unemployment: 2005 As Expected Last Year Annual Average Rate of 5.9% Strong Second Half Improved Through Year

  14. Unemployment: 2006Rigor Mortis? Constant 5.4% to Third Quarter Ends the Year at 5.3% 2006 Average of 5.3% Betters Than 5.9% of 2005 Continued Good News

  15. Unemployment: 2007Still in Rigor Small Movements First Half of YearUp to 5.6% Second Half of YearBack to 5.5% Yearly Average 5.5% At “Full Employment”

  16. Labor Force Growth: 2000 - 2005 Labor Force In Thousands recovery recession Growth At 2.5% Since 2002

  17. Labor Force Growth: 2004 - 2006 Supply Increased • 2004 and 2005 • Up by 20,000 • 2.9% Total • 1.6% Migration • 2006 Slows

  18. Civilian Labor Force Growth in 2006 • 3,000 New Workers in 2006 • Supply up by Only 0.75% for the Year • Strong Regional and Local Opportunities Growth Slowing

  19. Civilian Labor Force 2007:Movement Detected • First Half Up 1.25% • Second Half Up 1.75% • In 2007 • 5,700 New Workers • 1.5% Increase Growth Increasing More Stable – Less Volatile Movement

  20. Employment Pattern2003 to 2005 • Up 1.9% in 2003 • Up 2.5% in 2004 • Up 3.3% in 2005 • 8,400 New Jobs • Third Best in History Recovery Started in 2003

  21. Job Growth - 2006 Good But Slowing • Continued Job Growth In 2006 First Half Job Growth – Up 3.25% Second Half Job Growth – Up 2.25% For the YearJob Growth of 2.75%Adds 7,200 New Jobs Percent Change

  22. Job Growth 2007Moderation Continues • Job Growth Continues In 2007 First Half Job Growth – 1.7% Second HalfJob Growth 2.2% Annual Growth Of 2.0% 5,300 New Jobs Percent Change

  23. Labor Market Detection • Three Years Near “Full Employment” • Some Problems Loom • Construction Sector Skill Shortage • Medical and Technical Specialty Needs Suspects and Issues

  24. Total Personal IncomeAccelerates Two Good Years • 2005 – Big Jump • Up 5.6% • Above 3.9% Trend • $26 Billion for Households • 2006 – Strong • 5.0% Increase • $2.2 Billion Increase

  25. Total Personal IncomeGrowth to Remain Solid • Up 4.4% • $2.1 Billion More • Three Years of Growth Above Long Term Trend Rate of 3.9% 2007 – Income Growth

  26. Demystifying Income Growth • Strong Economy and More Jobs • Restructured Jobs Opportunities • High-End Service Sector • Manufacturing Stability • Higher Wages in Trade Jobs • Education and Productive Workers

  27. Total and Per Capita Income GrowthMysterious Convergence Strong Growth In Both Per Capita and Total Income – 2005 to 2007 Starting in 2005 Total and Per Capita Rise At Similar Rates New Pattern Remains Into 2007

  28. Average Income Per Person 2007 Per Capita Income • $39,800 • 25% Gain in 3 Years • Average Annual Growth of 8% • Best in 30 Years

  29. Illuminating the Why Economic Growth Labor Market Improvements Reduced Household Size • School Age Population Shrinks • Smaller Sized Housing Units

  30. Retail Sales Growth: 2005 Mystery: Third Quarter Third Sales Surged • Up 12.3% • 5% Over Forecast Culprits • Higher Gas Prices • Local Tourism • Housing Strength

  31. Retail Sales Growth: 2005 Year Ends Normally Fourth Quarter • Up 7.2% For the Year - 2005 • Dollar Sales Up 9.2% • Real Sales Up 5.7%

  32. Retail Sales Growth: 2006 More of the Same in 2006 First Half Up 8.5% • Higher Incomes • Good Job Market Third Quarter Slows • Up 4.8% • Energy Prices Hurt • Slower Housing Activity Fourth Quarter – Holiday • Up 6.9% • $1.6 Billion – Record Annual Increase of 7.0%

  33. Retail Sales In 2007 First Half Strong • First quarter up 7.0% • Second quarter up 5.0% Second Half Also Solid • Third quarter up 5.0% • Fourth quarter up 5.25% Annual Increase of 5.5% • Real Sales Up 2.0% Slower 2007

  34. Housing: No Mystery Here • Up 12% In 2003 • 2004 Up 4% • Strong 2005 Up 14% Hot Housing Market: 2003 to 2005

  35. Housing 2006 A Change of Direction • First Half Strong • Up 9.0% • Third Quarter Slowing • No Real Increase • Fourth Quarter Down 4.3% • Annual Rate Up 3%

  36. Housing In 2007Another Change of Direction • Declining Activity in First Three Quarters • Slower Closings • Price Concerns • More Time on the Market • Fourth Quarter Recovery • Up 1.5% • Annual Decline of 2.0% Down to Up

  37. Multi-FamilyA Recovering Sector • Vacancy Rates Down • Rents Move Up • Fewer Condominium Conversions • Smaller Household Size Increase Demand Improvement Started in 2006

  38. Commercial Real Estate Industrial Space Market • Vacancies Remain Lowest in Region • Strong Port, Fife, Sumner, and Auburn Areas • Lease Rates Moving Up Steadily • Spec Buildings Leasing Up • The Mystery: Land Availability? • Market Strong Through 2007

  39. Retail Real Estate Sales, Population, and Income Growth • Lowest Vacancy Rates in Region • Improving Lease Terms • Renovations at Existing Sites • Up-Scale Retail Potential

  40. Office Space Lagging Sector Picks Up • Vacancy Rates Fall Below Regional Average • Supply Increasing • Steady Lease Rates • Attractive Local Market Conditions • Good Year in 2007

  41. Port and Trade ActivitySome Cooling Slower 2006 • 2% Increase • Larger Vessels • Military Shipments Help • Auto Traffic Up 17% • Grain Exports Good (1,000 of TEUs)

  42. Port and Trade: 2007 Strengthening Activity • World Trade Up • Domestic Activity Strong • New Service Will Call At Port • Larger Vessels for Existing Service • Growth of 3% • Investments in Facilities and Improvements Continue

  43. PCEI 1995 to 2007

  44. Special Thanks To: LandAmerica Commercial Service Port of Tacoma Puget Sound Energy Regence BlueShield Tacoma-Pierce County Association of REALTORS Tacoma Public Utilities Venture Bank Tacoma-Pierce County Chamber

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