Pierce County Economic Index Presentation

Prepared by

Dr. Doug Goodman, Ph.D.
And

Dr. Bruce Mann, Ph.D.
Department of Economics and Civic Scholarship Initiative University of Puget Sound

Special Thanks To:
Comcast: Presenting Sponsor Propel Insurance: Speaker Sponsor Puget Sound Energy: Premier Horizons Sponsor Group Health Cooperative: Premier Horizons Sponsor AmericanWest Bank: Supporting Horizons Sponsor Tacoma Public Utilities: Report Sponsor Waste Connections, Inc.: TV/Broadcast Sponsor Business Examiner Media Group: Media Sponsor Port of Tacoma: Table Arrangement Sponsor PJ Hummel & Company: Décor Sponsor Targa Sound Terminal: Coffee & Connections Sponsor

The Pierce County Economy
The Beat Goes On

2011-2012 Forecast

National and Local Recession
2000 = 100 for PCEI and RGDP

Pierce County Economic Index

Pierce County Economic Index 2010 End Of Recession
Recession To Recovery First Half Weak ± Down 4.25% Third Quarter Improvement Fourth Quarter Starts Recovery

Pierce County Economic Index 2011
Heat Wave? Q1 Up 3.7% Q2 Up 5.25% Q3 Up 5.25% Q4 Up 4.3% Full Year Of Growth Up 4.67%

Pierce County Economic Index 2012
Can You Light My Fire? Q1 Up 3.7% Q2 Up 2% Q3 Up 1.8% Q4 Up 1.6% Second Year Of Growth Up 2.25%

The Classic Tunes Of 2011 Good Vibrations
National Economic Polices
TARP And Recovery Act

Construction Activity
Low Rates, Lewis-McChord, Infrastructure

Troop Strength Up By 15,000 + Strong Education And Health Care Consumer Expenditure Rebounds

Slowing Down Beat for 2012
Nowhere To Run, Nowhere To Hide
Troop Build-Up Slows Challenges To Trade Activity
Euro ± Zone And China Difficulties

Less State And Local Government Support Weakening Consumer Spending
Savings Up And Weak Non-Labor Income

Funding Issues for Small Businesses Debt ± Deficit ± Monetary Twist Sovereign Debt Issues Strength Of National Recovery

Soothing Back Beat for 2012
Recovering Construction Sector Mall Expansions Major Industrial Spaces Filling Health Care Remains Strong Building Planes Builds Jobs The Recovery Is Here To Stay

Labor Market Activity

Employment And Jobs

Employment: 2010 and 2011
No Jobs To Get
Down Beat To Up Beat Recession Loss
13,000 Jobs Gone 5% Of The Total

Small Gains Early
Started Up in 11 Q1 Up 0.2% In 11 Q4

Employment: 2012
Slow But Steady
Breakin¶ Rocks In The Hot Sun
Q1: Up 0.4 Percent Q2: Gain Of 0.5 Percent Q3: Up 0.7 Percent Q4: Plus 0.7 Percent For The Year Modest Growth Half Of A Percent

Employment: 2008 ± 2012
From Wipe Out To Bouncing Red Rubber Ball

Recovery Recession

Recession Cost: 46,000 Jobs

Labor Market Activity: Labor Force

Labor Force And Employment

Labor Force 2005-2011
Leavin¶ On A Jet Plane? Down 0.1% In 2010 Off 1.5% In 2011
Weak Job Prospects Return To School Quit Searching More Out-migration Less In-migration

Labor Force 2012
Growth Returns
Soft First Half
Poor Job Prospects Out Migration Continued Schooling

Better Second Half
Improved Employment Workers Return Annual Increase Of 0.3% Weakest On Record

Labor Market Activity Unemployment

Unemployment: 2005- 2010
Singing The Blues Pre-recession Low Of 4.7% in 2007 Increased in 2009 To 9.7% Maximum in 2010 At 9.9%
Highest Since The 1980s

Unemployment: 2011
Slippin¶ and Slidin¶ During The Year 10.3% - Q1 9.6% - Q2 9.4% - Q3 9.1% - Q4 Annual Rate = 9.6%

Unemployment: 2011 - 2012

Annual Average = 9.6%

Annual Average = 8.7%

Tough Job Searching 96 Tears

Personal Income

Total And Per Capita

Total Personal Income
Growth Since 2000
Up - But Slow
Growth In Recession
Up 1% In 2009 Up 1.4% In 2010

Growth Slower
Lost Earnings Continued Increase Of Non-Labor Income

6.5% Per Year

Non-Labor Income One-Third Of Total

Total Personal Income
2011- 2012
Up - Up - And Away
$40
Recovery

Total Personal Income Billions Of Dollars
Recession

Labor Earnings Improve Growth In Recovery
2011: Up 6.5% 2012: Up 5.0%

$35
Pre-recession

$30

Inflation-Adjusted ± Up
2011: Up 3.2% 2012: Up 2.9%

$25

$20

Per Capita Personal Income 2005 ± 2010
Average Income Growth Drops
2009: Down 0.4% 2010: Down 0.8%
First Two Year Decline Of Per Capita Income On Record

Per Capita Personal Income 2009 ± 2012
Money: That¶s What I Want
2011: Up 5.2% 2012: Up 3.7%
Two Years Of Losses Now Two Years Of Gains

Lost Per Capita Income

Per Capita Income Down By $6,100 In 2012 ± 14% Lost By 2012 Total Loss Of Personal Income = $5 Billion

Real Per Capita Personal Income
Doin¶ The ³Local´ Motion Up 2.0% In 2011 Up 1.5% In 2012 Recession¶s 2% Loss Now Recovered

Retail Sales

Retail Sales: 2005 - 2010
Ain¶t No Mountain High Enough? Not!
Retail Sales Down
2008 ± Off 8.5% 2009 ± Off 7.8% 2010 ± No Growth

2008 ± 2010 Total Loss: $4.8 Billion

Retail Sales: 2011 Back To The Stores
A Tale Of Two Halves
Good First Half Of Year
First Quarter Up 5.6% Second Quarter Up 4.9%

Slower Second Half
Third Quarter ± Flat Fourth Quarter Up 1.6%

Retail Sales: 2012 Consumers Turn Cautious
It¶s The Same Old Song
Modest Increases
First Quarter Up 2.4% Second Quarter Up 3.3% Third Quarter Up 2.1% Fourth Quarter Up 1.8%

Slow Down In Spending
Savings Need Debt Repayment Income Uncertainty

Retail Sales: 2005 - 2012

Dollar Volume Back To 2005 Level Loss Due To Recession = $9.5 Billion

Real Estate Activity

Housing Index 2005 - 2010
Singing The Blues
Housing Dives
2007 Off 9% 2008 Down 18% 2009 Drops 5.5% Total Loss Of 30% 2010 Up 4.4%

Housing: 2010 - 2011
Cry Me A River
Gains To Losses 2010 Ends Down 5% Weak Start To 2011
First Quarter Down 13% Second Quarter Down 10% Third Quarter Off 4%

Year End Rebound
Fourth Quarter Up 1.0%
2010 2011

Housing: 2012
Some Hope Emerges
Diminishing Gains
First Quarter Up 5.3% Second Quarter Up 4.8% Third Quarter Gains 2.7% Fourth Quarter Up 1.0% Annual Gain of 3.4%

Housing 2005 - 2012
The Promised Rose Garden?
Getting Better But Worries
Shadow Inventory Impact Lower Prices Weaken Sales Activity Mortgage Lending Underwriting Standards Borrower Reluctance

Multi-Family Housing
Renting Up
Tough Market Through 2009
Rents Flat ± Vacancy High

Conditions Turn In 2010 - 2011
Owners Become Renters Troops Hit The Market Graduates Need Housing Parental Nests Start Emptying Vacancy Rate Near 6% And Rents Firm

Multi-Family Housing: 2012
Hang On Sloopy, Sloopy Hang On Demand: Increases ± Slow, But Steady Supply: Up ± Construction Starts Again
Near Military Installations And Tacoma Mall Countywide Condo Conversions

Rents Up - Vacancy Good At 6% Weak Condominium Market

Commercial Real Estate
Play That Funky Music
2010 ± 2011: Stability and Improvement
Health Care Sector Grows And Builds Industrial Parks Leasing Up

2012 Continued Strengthening
Area Mall Improvements Elks Building Renovation Tacoma: A Grocery Downtown New Retail On The Peninsula

Caution: Intense Regional Competition

Industrial Real Estate Working It Out
2010 Stabilized 2011 Signs Of Improvement
Vacancy Rates Down Positive Space Absorption

2012 Consolidating Gains
Low Vacancy Rates Competition For Tenants

Trade And Distribution

Port and Trade Activity
Kung Fu Fighting Trade Woes
Recession, Competition, Global Uncertainty Container Cargo
2006 ± 2010: Off 30% 2011 Flat 2012 Up 2.9%
(1,000 of TEUs)

Breakbulk And Autos Up Investment In Facilities And Environment

Pierce County Economy Times They Are A Changin¶

Special Thanks to
Tacoma-Pierce County Chamber Gary Brackett University of Puget Sound Civic Scholarship Initiative

Thanks To:
Comcast: Presenting Sponsor Propel Insurance: Speaker Sponsor Puget Sound Energy: Premier Horizons Sponsor Group Health Cooperative: Premier Horizons Sponsor AmericanWest Bank: Supporting Horizons Sponsor Tacoma Public Utilities: Report Sponsor Waste Connections, Inc.: TV/Broadcast Sponsor Business Examiner Media Group: Media Sponsor Port of Tacoma: Table Arrangement Sponsor PJ Hummel & Company: Décor Sponsor Targa Sound Terminal: Coffee & Connections Sponsor