As is generally the case, a recent snapshot of national, regional and local economic indicators provided good news tempered with caution and concern.
The good news, according to Windermere Real Estate Chief Economist Matthew Gardner, is that the economy will continue to grow over the next couple of years. More than two million jobs have been added this year and consumer confidence remains high, he said.
Gardner, who delivered his state-of-the-economy address at a recent breakfast hosted by the Port of Chelan County, also warned that the U.S. will likely face a recession in 18 months, somewhere toward the end of 2019 and into 2020.
“Be prepared,” he said. “It won’t be nearly as severe as our last recession; probably something like we saw in 1991.”
He also expressed concern over looming trade wars with China and others. “Nobody wins a trade war,” Gardner said. He noted that China was Washington state’s largest export country. “Thirteen percent of our goods go there,” he said. “Those goods include aircraft from Boeing, soybeans, wheat and corn.”
Gardner also warned that affordable housing is becoming a greater problem as home prices in many parts of the state (including Wenatchee) are appreciating at nearly 10 percent while wages are growing at less than 3 percent.
“Home prices should actually track inflation (maybe 3 percent), but are outpacing wages by a good margin,” Gardner told the breakfast crowd of 100 or so mostly business people. He said it would be increasingly difficult to attract employers if their employees can’t afford to live here.
“We aren’t building enough homes to keep up with the demand,” he said. “That’s mostly due to the high cost of land, permits, labor and materials.”
Gardner also noted that:
- Companies were mostly using the recent tax cut to buy back stock, but not investing in people. “You usually implement tax cuts when the economy is slowing, not growing,” he said.
- Small businesses are expanding.
- Most of Washington state’s population growth came from California, Oregon and Texas. “More than 150,000 people moved here from California over the last five years,” he said.
- We are seeing a migration east in Washington state as people leave Seattle in search of affordable living. “Housing prices are even making Spokane unaffordable,” Gardner noted. “Some are skipping us altogether and moving to Boise, Idaho. We need to keep them here, not Idaho.”
- We’ll see a population growth of around 7 percent over the next 10 years.
- Washington state has typically come out of recessions better than the rest of the nation.
- The state will add 74,000 jobs in 2018. “Those who want to work should have no problem finding a job,” said Gardner.
- There is a nursing crisis. There is also a shortage of truck drivers. “Without truckers we can’t move goods,” he noted.
- There is also a shortage of skilled laborers. “We need more vocational training,” said Gardner. “If we shut the border down who is going to build the homes we need?”
- Washington state residents spent $15 million last year to get high (on marijuana). King County led the state in marijuana sales.