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With interest rates rising and inflation higher than this time last year, many may ponder — what is the state of the local economy?
In several areas, the local economy appears to be blooming. With inflationary pressures, however, some industries are seeing slowing.
Here is a look at some major local sectors:
Hospitality
Clark County’s hospitality industry is doing nearly as well as it was before the onset of the pandemic.
“We’re not quite to 2019 levels,” said Mike McLeod, general manager at Hilton Vancouver Washington. “Our occupancy is very close.”
McLeod expects the Hilton to exceed that last pre-pandemic year in the coming year.
The hotel’s business has changed. There aren’t as many conventions or catered events. However, McLeod noted, there were still COVID-19 restrictions in the first part of 2022.
The hotel had a strong holiday season, but it wasn’t quite like 2019, which McLeod said was their best year ever.
McLeod said he sees Vancouver’s hospitality businesses as all generally in the same boat — getting close to 2019 performance but not quite there. But, his impression is hotels in Vancouver have recovered from the pandemic quicker than hotels in Portland.
Still, like in other industries, McLeod said expenses for both labor and everything else have risen, putting pressure on margins.
Corporations
Local public company ZoomInfo has grown since it went public in 2020. It has seen continual growth in its quarterly reports. The company is in a good place to broadly pick up on the feelings of investors and other companies.
“Based on the growing inflation that we’ve had, a lot of pressure coming down from the (Federal Reserve) to raise interest rates — those are signs that it’s getting harder,” said Scott Sutton, chief business officer at ZoomInfo, noting he’s not a world-class economist.
Sutton added that he thinks as capital is becoming more restricted, commerce is slowing down.
“A lot of people in the market are being cautious in the current moment; they’re examining their decisions,” Sutton said. “So there’s often maybe more of a process involved in making business decisions.”
A big focus, Sutton said, is on efficiency.
Retail
“This holiday shopping season will differ from recent past years, as it will be the first fully in-person since the pandemic,” John McDonagh, president and chief executive at the Greater Vancouver Chamber, said. “It could prove very strong for local retailers that are attempting to getting back on track since the pandemic.”
Local retailers, he added, however, are experiencing staffing shortages.
And while last month was a huge boost for the region’s businesses, especially for hospitality, McDonagh doesn’t assume that will last.
“We are expecting the inevitable and cyclical slow demand following the holidays,” he added.
Real estate
For well over a year, the local residential real estate market has seen rising prices and constrained supply. But with changes in interest rates, that has shifted.
November’s average prices moderated compared with prior months, said Mike Lamb, a broker at Windemere Northwest Living.
The median sales price in the local residential market slipped 2.1 percent from October, though it was still up 6.3 percent from the previous year.
Shockingly, the numbers of new pending residential sales and new closed residential sales were down 48 percent and 43.2 percent respectively from 2021.
Meanwhile, Lamb’s latest sales report showed that properties sold so far this year were down 21.2 percent.
Inventory was a little more plentiful. Active listings were up 101.7 percent from 2021, which had been a record low.
Labor
Southwest Washington’s labor market has continued to grow, with the county adding more than a thousand jobs in November despite a slight rise in unemployment.
The region’s employment base has grown faster than the state, federal, Seattle and Portland labor markets.
In his October newsletter, regional economist Scott Bailey pointed out that nationally business was continuing to head in a positive direction at that time. Gross domestic product, total personal income, industrial production, retail and food service sales and the labor market, all measures tracked by the National Bureau of Economic Research’s Recession Committee, were continuing to grow, despite the Federal Reserve’s efforts to tame inflation by raising interest rates.
Corporate profits, Bailey mentioned in his newsletter, have boomed since the 2012-2019 average, being just shy of 50 percent higher in the third quarter of 2022. However, he noted, profits were less than in the second quarter of 2022.
Inflation is a concern, locally and nationally. The U.S. consumer price index rose 7.1 percent between November 2021 and November 2022, then ticked up only 0.1 percent over October. According to the Bureau of Labor Statistics, it was the smallest year-over-year increase since December 2021.
The question remains, where will inflation go from here?
