Puget Sound Economic Forum
commercial real estate market Puget Sound economy Seattle economics Seattle economy Seattle housing US economy
Overall, panelists predicted a mediocre recovery in US financial markets, with world GDP growing at a much faster rate; Europe remaining a threat on the verge of a "fiscal cliff" that could impact economic recovery in the US (see my previous post for some insight as to the links between the US and world economies); and Seattle in particular doing well in this post-recovery period. Boeing is a major player in the region's economic health and their growth forecast is very healthy.
Currently, the US government spends 24% of GDP, but takes in only 15% in taxes, one of the lowest tax receipts since the 1950s. When the US last balanced its budget under the Clinton administration, it spent about 19% on GDP and took in the same percentage in tax revenue. This is sustainable, Mr. Ristuben argued. Spending must go down, and tax revenue must go down in order to balance our budget in the long run.
Ristuben characterized the velocity of money as "moribund," but did not consider inflation to be an immediate concern. Johnson quoted Thomas Friedman in the September 8 NY Times as stating, "More than ever now, lifelong learning is the key to getting into, and staying in, the middle class."
In terms of publicly-traded equities, REITs have been the best performing asset class in the recent past. So real estate has outperformed other equity classes, demonstrating once again that investment in real estate makes financial sense.
Panelists were particularly optimistic about Seattle's economic prospects for the future. Seattle was recently ranked as the seventh best commercial real estate market in the United States. Apartment vacancies are down to 3.8% and rents are up 2.7%. Construction permits are up 50%. Job growth is up 5.1% and unemployment is down 1.3%. This job growth is more than double that of the United States average, and more than three times that for the rest of the state.
Talent is attracted to Seattle's vibrant neighborhoods. The economy has become extremely diversified as it transitioned from resource extraction to industrial and manufacturing to today's economic engine with high tech, Boeing, and biotech among the major employers.
Concerns centered around recent City Council decisions regarding the sick leave ordinance, and non-disclosure of criminal backgrounds. In addition, the Port of Seattle competes rather than collaborates with the neighboring Port of Tacoma; which means that both will lose out to port traffic in Los Angeles, the Suez, Panama, and Lake Rupert, Canada.
Overall, most panelists described the economic forecast for the region to be "cautious optimism."