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Our economy | How’s it doing? Wenatchee Valley leaders: In their words

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Patrick Jones, the executive director of the Institute for Public Policy and Economic Analysis, sees good things ahead for 2019.

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How’s the economy today and what’s it going to look like a year from now? Here is what they said. 

  

Don Meseck | regional labor economist, state Employment Security Department

By Reilly Kneedler, World staff writer

How is our economy today and what’s it going to look like a year from now?

The short answer is: “pretty good.” During the recession, unemployment rates in the Wenatchee MSA increased to 9.2 percent in 2010 before decreasing to 5.9 percent in 2015 (i.e., a pre-recession level of unemployment). However, unemployment edged upwards to 6.0 percent in 2016 primarily due to the idling of the Alcoa smelter in January 2016 and the subsequent layoffs of over 400 workers at this plant. The local unemployment rate then resumed its decline, to 5.1 percent in 2017 and to a historic low 4.9-percent reading in 2018. This 4.9-percent reading last year was the lowest average annual unemployment rate in the Wenatchee MSA since electronic records were implemented by our agency in 1980 (28 years ago) – encouraging news for the local economy.

Annual average nonfarm employment in the Wenatchee MSA has expanded in each of the past eight years (2011 through 2018, inclusive) at growth rates not much different than growth rates statewide. For example, between 2017 and 2018 nonfarm employment in the Wenatchee MSA increased 2.6 percent versus a 2.8 percent growth pace in Washington State.

What’s your biggest worry about the coming year?

Although nonfarm employment in the Wenatchee MSA has stabilized or expanded for the past 80 consecutive months, the job growth pace is decelerating. One local industry to watch is retail trade. Conversely, Washington State’s retail industry has added jobs for 98 consecutive months (October 2010 through November 2018). But, in which retail subsectors has this job growth occurred? Preliminary CES estimates indicate that of the 8,700 retail trade jobs added statewide between 2017 and 2018, approximately three-quarters (6,600 jobs) were in “other retail trade” — which includes firms providing online versus “brick-and-mortar” shopping services. 

However, the most difficult question to answer is, “What’s the economy going to do in 2019?” I don’t have a crystal ball but, from my perspective, we presently have a “mixed bag” of economic indicators here in Chelan and Douglas counties. However, one can say that 2018 was a good economic year for the Wenatchee MSA. Although some indicators (especially nonfarm job growth rates) show that the economy was not as strong in the 4th Quarter as in the 1st Quarter of 2018, and some retail trade stores may struggle this year, there is considerable resiliency in the local construction, health services, leisure and hospitality, and local government industries. We should also not forget the “big kid on the block” — Agriculture.

What indicators do you watch?

I look at several indicators and compare local with statewide trends. For example, every month, for each of the seven counties I serve, I prepare a “Total Nonfarm Employment Changes” graph. I also look at professional and business services job growth rates (which includes temporary agency employment), year-over-year monthly growth rates in each of the MSA’s major local industries, unemployment and civilian labor force trends, building permits issued, statewide and national GDP growth rates, etc.

  

Ron Berschauer | Jerry’s Auto Supply

By Pete O’Cain, World staff writer

How is our economy today and what’s it going to look like a year from now?

Despite news that the national economy is “on fire” we do not see that to be the case currently nor do we expect next year to be much different. We supply products to all facets of the agricultural economy and uncertainty over tariffs and the impact on world markets appears to be restraining spending.

The retail economy is being impacted by e-commerce at a rate that few anticipated. As a supplier of auto parts and accessories we have been described as a “recession” industry whereby consumers hesitate to buy new vehicles and tend to repair their older vehicles when the economy is down. Conversely a “hot” economy favors new car sales. We expect sales to be “flat” for this year and next.

What’s your biggest worry about the coming year?

We consider “worrying” to be a waste of productive time and certainly “worrying” will not make a company more competitive. We are pursuing e-commerce solutions like “pay online/pick-up at store” as ways that we can make shopping more convenient for our customers. Our concern: is that e-commerce bypasses our highly experienced sales staff and can result in consumers making uninformed decisions about vehicle maintenance.

What indicator(s) do you watch? 

Farm prices and new construction starts are some of the best gauges of economic health for our industry.

 

Steve Wright | general manager, Chelan County PUD

By Tony Buhr, World staff writer

How is our economy today and what’s it going to look like a year from now?:

The No. 1 measure for state of the economy is unemployment and the numbers for this region are very good, especially given the closure of the Alcoa plant a few years ago.

What’s your biggest worry about the coming year?

Wholesale electric prices in the western United States have been marching steadily downward for the last 5 years but appear to have plateaued in the last six months.

What indicator(s) do you watch? (For example: Jobless rate, retail sales tax, building permits):

Beyond the unemployment numbers, the key variable I watch is wholesale electric prices because this is the biggest variable in future PUD revenues. We know PUD electricity is one of the key competitive advantages this county has. Our sales into the wholesale market outside Chelan County are the primary reason for our low rates. 

 

Cary Condotta | former District 12 state lawmaker 

By Tony Buhr, World staff writer

How is our economy today and what’s it going to look like a year from now?:

By all the numbers the economy looks very, very good. Very, very low unemployment. Very good forward movement in almost every category. The housing market is starting to level out just a tad. Interest rates are still climbing, but I think that has leveled off. But I think a lot depends on the trade issues. The big China trade agreement is going to make a big difference for our area. And if that is resolved than I think we have a great couple years in front of us.

What’s your biggest worry about the coming year?:

I think it is probably the China trade agreement and in the state of Washington raising taxes. They’ve already had a 75 percent increase in their budget in the last eight years and there is no reason for any further tax increases. And I’m sure those would be leveled on business that is not a good thing. Right now business pays 52 percent of the general fund. That is very high.

So I’d be concerned what the Washington state does with the legislature and what Washington, D.C. does with the Chinese trade agreement. Those are the two things that concern me most.

What indicator(s) do you watch? (For example: Jobless rate, retail sales tax, building permits):

I think obviously GDP is very important. The job creation has been phenomenal. Again the GDP has been very good in the three and four range. Interest rates, what does the Fed do? And then again these trade agreements and how they work. The Mexico and Canada one looks very good, certainly an improvement over the prior agreement and Europe looks

China is a big part for us as a net exporter it is a very important piece of the puzzle. So we’ll have to see how it goes. So far, it sounds like it is going to be moving along. Yeah, I think in general it sounds as good as its been in the 24 years that I’ve been in the valley.

Locally agriculture has a big effect than it would in some other areas. I think Ag is still a leader.

Housing is going to be the next concern if interest rates continue to rise slowing down the housing situation.

I can tell you from just buying a house two weeks ago that market has not slowed down in Wenatchee. It is much stronger than it is in Seattle. Seattle has cooled off because we just sold a place in Seattle. But Wenatchee is still going great guns.

I think if they hold interest rates then, yeah. It is going to flatten off no question because Seattle is the lead. And a lot of the money coming over the hill is coming from Seattle. And once that starts to settle down I think we’ll see a little pull back. But the nice thing about Wenatchee is that it’s been on a pretty steady glide path for about 25 years it goes up and down a little bit. It doesn’t have the gyrations that Seattle does. It seems to stay on a much smaller curve. 

 

Steve King | economic development director, city of Wenatchee

By Bridget Mire, World staff writer

How is our economy today and what’s it going to look like a year from now?

Right now our economy is doing really well. I would say it’s leveling off in a very good spot. In other words, the growth rate is slowing down a little bit. In the coming years, we’re still seeing plenty of development activity on the horizon. We’ve got to focus on the good-quality, higher-paying jobs. That’s always a focus. To improve our economic situation, we need good employment. That’s something to think about a lot. But I also think about investment in our community. … We have a number of building owners where people are investing in downtown. We have more hotels on the construction list. Those are all good things that are keeping our economy going strong here.

What’s your biggest worry about the coming year?

I don’t have a huge worry for our economy for this coming year. Obviously, the concerns are when you hear about Shopko closing and now Payless Shoes. Those things are troublesome, but I don’t worry about them. It’s a trend (of box stores closing). It’s just a reality; it’s kind of anticipated. From an economy standpoint, we have other good things happening here that make up for it — the Hilton opening up, and there’s other things that are helping us along. If we didn’t have those other things, it would be a lot more troublesome.

What indicators do you watch?

What we typically use as an indicator is how many people (apply) for permits or pre-application conferences and what is the land speculation outlook in terms of building new housing or building commercial projects. We have a fair amount of that activity stacked up, which I think will carry us through 2019-2020. The other indicator we look at is what’s happening in Seattle. Typically, Wenatchee’s about two years behind Seattle — two years behind on the uptick and two years behind on the slowdown. We are starting to see a little bit of a slowdown in Seattle, which means maybe in about a year and half or two years, we might start to see some of that slowdown here. Although, I’ve got to tell you, Wenatchee’s unique in that we don’t ever seem to get overbuilt. We tend to just level off when things slow down.

Is there anything else you’d like to add?

Right now is a tough time in the fruit market. That’s a big deal to us. Those things cycle, and we’re hopeful that the fruit industry turns positive.

 

Gustavo Montoya | El Mundo publisher

By Pete O’Cain, World staff writer

How is our economy today and what’s it going to look like a year from now?

The economy I think it feels more uncertain, I would say. There’s several economic factors giving us very positive numbers, but I don’t know if they’re necessarily positive or false positives. I think that after the tax season is over we probably will know a little better where things are heading.

So next year, it all depends really on this one. In my opinion, from what I’m generally seeing and feeling with the community and myself, it’s uncertain.”

Montoya explained he feels that way because, “There’s so much volatility on the political side, so many issues on the front and … I don’t think that most everybody are really looking ahead, but we’re going to be losing many, many, many jobs to automated systems over every single industry, and the quick switch of many companies adjusting to those competitive worlds and making the availability of so many automated systems I think that’s going to continue to put a lot of people out of work.

So the shifting of people unemployed can be something that I don’t think everybody’s really paying attention to, in general.”

What’s your biggest worry about the coming year?

In many ways, there’s so much political flux, so much polarity that it feels like there’s a lot of things at stake. And with that, while there may be some infighting in D.C., I think that in many ways it’s creating somewhat of an opportunity, as well. I think that polarity, according to some studies, creates movement, so to speak.

And so, I see so much activity on the political side, so many moving parts — the Democratic party is moving very strongly with many candidates, kind of like 2016, but for the Democratic party, in terms of candidates. And now that the Republican party is in the administration side, that seems to not have that many candidates for 2020. Perhaps you’re looking at a repeat of 2016, which is again, uncertain. And so for this year, I believe it’s a little early for 2020, but it’s moving pretty fast. I think it’s a bit of a holdup on the economy of what decisions are going to happen and what things are going to change in terms of voting on local districts and on the congress level.”

What indicator(s) do you watch?

I’m always looking at the tax checks going back to all Americans. Those numbers tend to be very strong and so we’ll see if that is going to be lasting. Again, the tax code changed last year so we’re probably going to see a little bit more of what’s going to be settling down over time.

Clearly, the changes in the trade are also kind of an important thing. I think there’s a little bit of news that we’re becoming a little bit more dependent on fruits and vegetables from Mexico and the south side so that can bring some additional business, but at the same time affect some others. So these trade deals also create some uncertainty. There’s quite a bit of things shifting and it’s a lot of moving parts.”

He added, “Changing weather, it may sound a bit overstated for some people, but the Ag industry, which is something that affects Eastern Washington more than even Western Washington, I would say that would be also another question mark for many of the folks.”

 

Linda Haglund | executive director, Wenatchee Downtown Association

By Nevonne McDaniels, Business World writer

How is our economy today and what’s it going to look like a year from now?

I see our economy doing better than I have seen in a bit. I gauge that by new businesses opening up and less vacancies in our downtown. I get calls all the time saying, “I am thinking of opening a business and wanted to connect with you.” I also look at the number of buildings in our downtown right now undergoing restoration. New spaces with new opportunities. I love people investing in this downtown and this community.

A year from now, I believe we will see more diversity in small business. Small business owners are tenacious and are adjusting to the “Amazon Effect” with online options and creative marketing.

What’s your biggest worry about the coming year?

My biggest worry is what legislation may do to small business, both state and nationally. Small business needs all the breaks they can get. More legislation and taxes are not going to help them. Also changes in the tax laws that make it more difficult to hire and retain employees won’t help either.

What indicators do you watch? 

Haglund: I watch pending bills and possible tax changes that may impact small business. I also watch the housing stats and the availability of housing for any new business wanting to relocate here along with employees.

 

Shannon Seaford | Papa Murphy’s 

By Bridget Mire, World staff writer

How is our economy today and what’s it going to look like a year from now?

In my personal view, I’m seeing spending trending downward. I’m seeing more budget-minded purchases. And I’m feeling it on the bottom line. … I think the economy is probably going to be looking pretty good (next year). When I’m talking about my business, it’s kind of a different animal and that’s really all I’ve got to go on. I’m seeing people shopping, seeing people out there. There’s just different trends in the way people are shopping and the way people are spending their money. I keep hoping, with minimum wage increases, that it’s going to increase or stimulate something, but I’m not really seeing that happen. I’m seeing it kind of being a counter-effect, which goes across the board where businesses have to raise prices or cut employees or housing goes up. … Spending-wise, our business is down. I’m hoping next year will be a better year.

What’s your biggest worry about the coming year?

How far do we grow? Do we take that risk or do we not? With us being employers of pretty much high school kids, I think a lot of businesses are feeling the brunt of having to pick up health care expenses. Now there’s this new Family Leave Act. I’m not really scared about it, but I don’t know where it’s going to trend to. … I think there’s more and more that’s being asked of small-business owners. … We’re trying to be that beginning job, so not really a career field unless they want to move into a management position. With our employees we are more of that younger generation, trying to teach them about customer service: the basic skills of kindness, counting money. That’s kind of where we put ourselves — or I have with my businesses. … Who knows what’s going to happen? I think that’s what the question is. Every year it seems like there’s something new, there’s something more, there’s something else.

What indicators do you watch?

I’m just basically following what affects my business personally. … I end up finding out through an email or someone sends me a letter saying, ‘These are the changes that are going to take place. Be ready for this,’ with no real explanation because they don’t even know what they’re doing yet. Instead of it being already in place and having it established, it worries me that some of these things are going through that there really isn’t a plan in black and white. It’s just, ‘We’re going to start doing this and we’ll figure it out later.’

Is there anything else you’d like to add?

I think the hospitality and food and restaurant (industries) are getting hit pretty hard. There’s always change, and everyone’s always resistant to change. You’re just going along, doing the best you can, and there’s always something. … There’s more small businesses than there are big businesses. They may employ more, but in the end, it’s the little guys that are out there. … Most of our money goes to the corporate office for paying for the name, the product and everything. People may generalize us franchises as we’re really secure, and it’s not that way. We, as franchisers, usually own multiple stores because the bottom line is very, very small. You open up another store so that you can, of course, accommodate your customers or get into another market, but it’s just to grow that bottom line. You get to a point where you’re growing and growing, and then there’s a problem where you have to hire more staff because I can’t do it all on my own anymore.

Shannon Seaford runs six Papa Murphy’s in Wenatchee, East Wenatchee, Moses Lake, Ephrata, Walla Walla and College Place

 

Gene Sharratt | state education leader 

By Nevonne McDaniels, Business World writer

How is our economy today and what’s it going to look like a year from now?

Gene Sharratt: Washington’s economy and employment growth remain strong. Our economy is healthy with 740,000 projected job openings by 2021, vibrant communities, and a diverse mix of market-learning employers.

Our state continues to be a national leader for job creation and innovation. The state’s rate of job creation is among the highest in the nation. However, the statewide data masks a complex regional picture in which prosperity is spread unevenly, and some communities – including many in our rural areas – are struggling.

Across the state, communities need infrastructure, workforce talent, and policy climate that support innovation, trade, and investment.

As for the future, the state and national labor market will continue to add jobs (the U.S. labor market added 304,000 net new jobs in January 2019). Consumer confidence will remain at a high level and Washington’s employment rate will remain strong. The state’s revenue collections will continue to allow for further investments in infrastructure and the demand for a skilled and educated workforce will continue to exceed supply. Washington will continue to be one of the highest importers of talent to meet the demand for skilled and educated workers. The local economy will move ahead at steady and predictable rate of economic and population growth.

What’s your biggest worry about the coming year?

Nationally, the U.S. budget deficit is projected to keep rising, surpassing an annual $1 trillion by 2022. This deficit widened to $319 billion in the first three months of the government’s fiscal year and now stands at $22 trillion. The U.S. government collects about 20 percent of GDP and spends 24 percent of GDP. Trade wars significantly impact our agricultural community. Washington is a leading agricultural state and our region enjoys a national and international, well-earned, reputation for quality agricultural products. A successful resolve to the current trade talks is imperative for a continued prosperous regional and state economy. The lack of a skilled and educated workforce will continue to impede our potential economic growth.

What indicator(s) do you watch?

Job creation, consumer confidence, employment growth, robust construction activity, local and state revenue collections, and regional and state infrastructure investments are important indicators of a healthy, growing and prosperous economy. The need to build a culture of innovation and talent creation, coupled with the easing of regulatory and duplicative business growth burdens, and supported by policies that promote economic development and job growth is imperative for our region and state.

Gene Sharratt chairs Washington’s STEM (science, technology, engineering and math) Education Innovation Alliance and is a member of the Career-Connect Washington and College Promise Coalitions. In addition, he is the executive director of the OSPI/AESD Professional Learning Network and the former superintendent of the North Central Educational Service District.

 

Dan Sutton | Douglas County commissioner 

By Tony Buhr, World staff writer

How is our economy today and what’s it going to look like a year from now?

Our economy locally today is strong. We’re approaching it with what I like to call cautious optimism. We had a stellar year 2018. I think we will have a nice reasonably strong year in 2019. I don’t see any economic indicators coming at us right now that would have a significant downturn or impact.

What’s your biggest worry about the coming year?:

Next year I’m reviewing next year with considerable more caution. I think what we’ve got is enough national discourse, enough state discourse. Sitting in Olympia and listening to the meetings there are going to be some extremely tough budget asks. That I think may have a negative psychological impact towards the economy.

I see people out there next year sitting on their investments for a little while to see how things play out.

The 2008 depression was not that long ago and it is still relatively fresh in people’s mind and especially business people’s minds. So I suspect you’re going to see them be more cautious.

What indicator(s) do you watch? (For example: Jobless rate, retail sales tax, building permits)

From the county level I watch for people looking to invest in the region, building permits, etc., etc. That’s why I feel pretty good about 2019. We still have a lot of interest in housing, which is great for our community because a lot of this interest is in the affordable housing sector. And as everyone who lives here knows that is important to our entire region.

We see some businesses in themselves coming over to Douglas County. We’re happy as can be to see business look at Douglas County and use not only our ag areas, but our industrial areas as well.

Small private business is changing right now which is due to a number of factors. Part of the business model is minimum wage employees and above. And some of the health restrictions and each of those has an impact on the bottom line.

As a commissioner we simply look at growth. We have a shared philosophy that we want to encourage well managed good growth in Douglas County. We have fair land values, inexpensive power and we want to be friendly with good quality businesses that come into our area.

We like the data centers and they bring more jobs to a region than people might think. There are a significant amount of jobs associated with tech support.

And a change of a few dollars can have a significant impact on the bottom line.  

 

Jon DeVaney | president, Washington State Tree Fruit Association

By Tony Buhr, World staff writer

How is our economy today and what’s it going to look like a year from now?:

The strength of the national economy is good news overall, but does present challenges for agriculture. Although some analysts have argued that a cyclical downturn is likely, so far the overall indicators have remained positive.

What’s your biggest worry about the coming year?:

A third of our tree fruit crops are exported, and so a significant unpredictable variable is the timeline for resolving trade disputes with key export markets where we are currently subject to retaliatory tariffs. These tariffs cut deeply into growers’ returns, and make some sales impossible.

What indicator(s) do you watch? (For example: Jobless rate, retail sales tax, building permits):

In addition to the size of our crops in Washington and in other tree fruit producing regions, we tend to monitor our input and transport costs. Very low unemployment makes the existing shortage of farm labor even more acute. The strong economy also increases competition for available freight capacity, and drives up rates. In addition, the strong economy keeps the U.S. dollar highly valued compared to the currencies in export markets, affecting the competitiveness of our exports.