The partial federal government shutdown was a last-minute star of the show for those involved in the 2019 Horizons Economic Forecast, held early Wednesday at the Greater Tacoma Convention Center.
The annual event, organized by the Tacoma-Pierce County Chamber, brought together economists offering a national and local perspective on the economy, with both mentioning the effect of uncertainty from the current shutdown.
The shutdown also kept U.S. Reps. Denny Heck and Derek Kilmer from attending as speakers, as they were both called back to Washington, D.C. Both appeared in video presentations.
The event’s keynote speaker, Jon Haveman, executive director of the National Economic Education Delegation, said that while the U.S. economy has grown, it’s not been enough to make up for lost time from the recession, notably from personal consumption expenditures falling below expected trends.
Tied to that is the fact that national figures on household debt also are down, and we’re saving more, essentially spending less.
Another component is housing investments and expenditures.
“Our population is growing, but our population is also aging,” he said. “The economy is slowing, so the demand for new housing is down.”
Regardless, there’s no sign of a downturn in home prices, Haveman added. “We’re at a point in time in the U.S. economy where it could kind of go either way,” he said.
He cited the need for more workers for available jobs nationwide.
“We’ve got lots of labor on the sidelines that could come in and increase productivity, increase GDP growth,” Haveman said, also noting that tougher immigration policies will have a ripple effect on reducing the labor force, further hurting economic growth.
He ticked off things to worry about: stock market volatility, trade policy uncertainty, immigration policy, the government shutdown and government debt crowding out other spending such as for roads and security.
Neal Johnson, principal of Sound Resource Economics and author of the Pierce County Economic Index, was interviewed by Tom Layson of KBTC’s Northwest Now. Johnson echoed Haveman’s concerns on potential tariffs and their effects on the county’s large trade and transportation sector.
“That’s probably a bigger risk than the government shutdown,” Johnson said. “You might see some slowdown in that sector going forward, but I think overall the county’s robust enough that we would weather that.”
As far as the shutdown’s effect locally, Johnson thought in the short term it would be seen most notably in the retail spending side.
Aside from the D.C. drama, the local economic index projected slower growth for 2019 compared with the previous two years.
Other highlights from the index’s executive summary: ▪ Jobs: Just under 10,000 jobs were created last year in Pierce County, with a projected 9,700 jobs to be added in 2019.
▪ Personal Income: Total real personal income estimated to have grown 4.6 percent in 2018, with the per capita rate of 2.6 percent. For 2019, 3.1 percent increase in total real personal income with a per capita rate of growth at 1.2 percent.
▪ Taxable retail sales: Total taxable retail sales grew 7.4 percent to $17.1 billion in 2018; forecast to increase at an annual rate of 4.1 percent through the end of the year.
▪ Housing and real estate: New listings declined 1.4 percent compared with 2017, closed sales fell 5.2 percent with active listings 13.4 percent lower in the fourth quarter than the previous year. The county’s affordability index also declined through 2018 after a more stable 2017. The affordability index is expected to trend lower for 2019, which indicates even less affordable housing.
“I was kind of surprised that buyers are perhaps a little myopic. They see mortgage rates going up, so they hold off on buying,” Johnson said. “But I think if they look at the data, mortgage rates are likely to continue going up. “So if they’re delaying buying a house with the hopes of getting a lower mortgage rate ... good luck.”
▪ Port of Tacoma, Northwest Seaport Alliance: Combined international and domestic volumes projected to grow 2 percent in 2019. NWSA’s market share for U.S. West Coast international container volume, according to the index, was projected to end 2018 at 13.3 percent, down from 13.4 percent in 2017 and 14.2 percent in 2016.
Johnson, in remarks Wednesday, and the index itself pointed to competition from the Canadian ports of Prince Rupert and Vancouver as the root cause of the decline.