A 'muddle-through economy' foreseen by Washington state economist
Originally published April 20, 2012 at 2:12 p.m., updated April 20, 2012 at 5:31 p.m.
Economists and other number crunchers have dubbed the flimsy U.S. economic recovery everything from the “jobless recovery” to the “Lesser Depression.”
Well, add another less-than-encouraging moniker for the state of things in the country and in Washington state: the “muddle-through economy.”
That description came by way of Bret Bertolin, senior economist for the Washington State Economic Forecast Council, who spoke Friday during the Washington State University Vancouver Chancellor’s Series spring conference.
The conference, with more than 50 people in attendance, aimed to gauge the national, state and regional economies, and state government tax revenues. Inside WSUV’s Firstenburg Student Commons, Bertolin was joined by Bonnie Moore, director of business services for the Columbia River Economic Development Council — the Vancouver-based nonprofit jobs promoter and business recruiter — and John McDonagh, publisher of the Vancouver Business Journal, who gave a joint presentation.
Bertolin spoke first, bracketed by PowerPoint slides.
Suffice it to say, the news was mostly bad. He said he and other state analysts “continue to see a muddle-through economy, with low growth, high unemployment and weak confidence.”
The biggest threats to the U.S. and Washington state economies are high energy prices and the European sovereign debt crisis, Bertolin said. It’s likely Europe will enter another recession — if it hasn’t already — and if it plunges into a full-scale crisis, “then we are likely to see another recession in the U.S. as well,” he said.
And while employment growth has been improving and the jobless rate has ratcheted down, Bertolin said, “what we really want to see is a self-sustaining virtuous cycle where job growth leads to income growth, spending growth and still more job growth.”
Bertolin deployed numbers to frame the gloomy situation. Here are just some of them:
• The U.S. gross domestic product — the monetary value of all the finished goods and services produced within the country’s borders — is back to its pre-recession peak, “but is being produced with 5.9 million fewer jobs.”
• Nearly 13 million people remain unemployed.
• The Great Recession wiped out $16 trillion of household net worth in the U.S., and only half that has been recovered so far, prompting consumers to remain cautious.
On the positive side? Bertolin said aerospace (otherwise known as Boeing Co.), software (otherwise known as Microsoft Corp.), agriculture and exports are helping Washington state outperform national averages in personal income, job growth and other measures.
However, the state has “internal drags,” including a dormant construction sector “and shrinking state and local government” payrolls, Bertolin said.
If Bertolin was the designated cold-water thrower in the room, then Moore and McDonagh were there to offer some hope based on what’s being done locally to improve our situation.
Nevertheless, they, too, spelled out the difficult spot Clark County — where the jobless rate is roughly 11 percent — and the region are in, noting we lack knowledge-based industries (such as software and information-technology companies), and face high foreclosure and poverty rates.
On the plus side, Clark County is home to strong public schools, maintains a low cost of living and is part of a Portland-Vancouver region that’s experiencing robust international trade with Pacific Rim countries, according to Moore and McDonagh.
Moore said Clark County in the 1990s transitioned from a lumber, pulp and paper economy to an economy marked by major high-tech employers, such as WaferTech.
After the economic crash, the county must now make another shift, she said, recognizing that it can no longer rely on traditional manufacturing, construction and retail to anchor its economy.
Guiding that shift is the 127-page Clark County Economic Development Plan, which was commissioned by the Columbia River Economic Development Council for $80,000.
Moore said work has just begun to implement the plan, which targets six business sectors: advanced manufacturing; information technology; agricultural processing; wealth management; health care management; and logistics and transportation.
Over the next 10 years, Moore said, area leaders in business, government and education will work on the following goals:
• Establish Clark County as a regional center of growth and innovation in the information technology sector.
• Greatly expand the roles of WSUV and Clark College in economic development.
• Make Clark County a hub for international investment in the Pacific Northwest.
• Boost the region’s business vitality by recruiting companies, expanding existing ones and aiding entrepreneurs.
• Invest in the infrastructure and amenities needed to attract new employers.
While the county has a new economic road map, Moore said, what’s more important is that it has a team in place to act on it.