Quick, what do the Boeing 787, cheap electricity, Microsoft’s Vista operating system, high-priced oil, the weak dollar and solar-grade polysilicon have in common?
Answer: All help keep the Pacific Northwest economy humming along at a relatively brisk clip. The region finds itself happily out of step with weak U.S. economic fundamentals.
The U.S. economy has slowed dramatically. First-quarter GDP growth (1.3%) was the slowest in four years. Yet parts of the Pacific Northwest are flat-out booming. Montana had the nation’s lowest March unemployment rate (2.0%), and its boom has spread to all sectors of its economy. Part of the credit goes to rising standards of living in “Chindia” — China and India. Rising global demand for raw materials including copper has reinvigorated Montana’s economy.
Most areas in the region not booming are growing at rates well above the U.S. average. The region’s relative prosperity is widespread geographically, as shown in the chart. (The Seattle area comprises three counties and includes Tacoma and Everett, the Portland area seven counties, including five in Oregon and two in Washington.)
Evidence of the region’s strength is not hard to find. Payroll employment in Idaho in 2006 grew at more than twice the national average. Idaho’s 2.8% March unemployment rate was the lowest in at least 30 years.
Montana and Idaho are essentially at full employment. Because wages are relatively low in both Montana and Idaho, neither state is pulling in a lot of working-age migrants (as opposed to retirees). Growth in both states may be hampered in the future by slow-growing labor forces.
In Washington, Oregon and Montana, payrolls last year grew roughly 50% faster than average. Unemployment in Washington is also at the lowest in more than 30 years.
Among the five states we track closely, only Alaska turned in sub-par 2006 payroll growth. But don’t fret over Alaska’s economy. The Last Frontier state is an enormous beneficiary of high oil prices and is on track for its 20th consecutive year of employment growth. Job growth slowed considerably in the first quarter in Washington and Idaho. Oregon has slowed even more; it currently grows at only half the 3.0%-plus it averaged during most of 2006. Yet all three continue to grow employment at above-average rates.
— Excerpted from Marple’s Pacific Northwest Letter, editor Michael Parks. For information about this biweekly report on Northwest economic trends, visit www.marples.com.