We do not often see a lot of news regarding the local economies; so, today’s blog post provides some insight into our local economies.
Jobs are the starting point of understanding our economy, whether national or local. Click on “Cumulative Jobs Growth” to see the graph for non-farm payroll jobs growth.
As the graph illustrates, non-farm payroll jobs growth has been slow for the country and especially for Spokane. The graph illustrates cumulative jobs growth since the recession began, through September 2014. The Tri-Cities area has shown the highest cumulative growth rate for the Northwest, but I caution that growth rates for smaller areas can be skewed since small changes can cause far bigger spikes or drops when the overall number of jobs is smaller. The message from the graph is that, overall, the Pacific Northwest economies have fared better than the United States when it comes to jobs growth.
Wage growth is the next area to examine since wages are the core source of income for the average American and income is what drives consumer spending. Click on “Cumulative Wage Growth” to see the graph.
This graph illustrates the cumulative growth rate of average hourly earnings for the U.S. and the Pacific Northwest. Portland has had the weakest wage growth while Coeur d’Alene has had the strongest wage growth. Remember, this is cumulative wage growth; it does not provide insight into the actual level of wages. Even though Portland has had slower growth in wages, their average hourly earnings ($24.57/hr) is higher than Coeur d’Alene’s ($19.11/hr). Looking at the big picture, the message is a bit more mixed since three of the Pacific Northwest metropolitan statistical areas (MSAs) outperformed the United States and three lagged.
Let us see how job and wage growth has translated into actual economic growth (GDP). Click on “GDP” to see a graph of GDP growth for the United States and the Pacific Northwest.
I think that if you surveyed most people in the Pacific Northwest, they would probably say that the Seattle area (Puget Sound) has had the best economic growth. The reality is that Portland has had the best economic growth for the past four years. The concerning part about Portland’s economic growth is the decelerating trend. This may well be the cumulative effect of their slow wage growth and clearly bears watching. Spokane has shown one of the weakest GDP growth rates for the Pacific Northwest over the past four years. The encouraging news is that Spokane is the only area that shows a steadily positive trend. The United States has hovered right around 2% economic growth for the past four years.
The overall message is that the Pacific Northwest economies have fared better than the United States but that Spokane lags in two out of the three areas examined today.
If, as a reader of this blog, you find this information useful then please feel free to comment if you would like to continue to see local economic information mixed in with the national information that is provided in these posts. If you have a topic that you would like to have explored, feel free to comment on that as well.
Steve Scranton is the Chief Investment Officer and Economist for Washington Trust Bank and is a CFA charter holder with over 30 years of investment experience with equities, tax-exempt and taxable fixed income securities. Steve actively participates on committees within the bank to help design strategies and policies related to client and bank owned investments. Steve also serves as the economist for the Bank and has been a featured speaker for both client and professional organization events throughout the Northwest.