Can Renton ‘Muddle Through’ The Current Economy?

Jobs and retail sales should slowly improve in Renton in the next several years, a Seattle economist told city leaders this week, giving a more upbeat outlook on the local economy than at the state and national level.

But Doug Pedersen, of Doug Pedersen and Associates, acknowledged that there’s a lot of uncertainty at all levels.

"Things have gotten a little more interesting here," Pedersen said at the start of his economic outlook presentation to the Renton on Monday.

Pedersen gave a rundown of the national, regional and Renton economies and forecasts to the council’s committee-of-the-whole before Monday’s regularly scheduled meeting.

While the three forecasts varied, they weren’t as rosy as six months ago, the last time he spoke to the council.

"It's just not entirely clear where we go from here,” he said, adding, “The consensus says we can muddle through with slow growth.”

Local employment, retail sales improving

In Renton, The Boeing Co. continues to provide a solid job base, although the number of local jobs offered by the company has declined over the years, Pedersen said.

With Boeing’s plans to ramp up production rates for the 737 over the next several years, that should add 1,500 jobs by 2014, according to the city’s website.

But drops in other employment have kept the city’s job market relatively steady.

Taxable retail sales dropped sharply throughout the region in 2007, held steady the next year, and then dropped 12 percent in 2009, Pedersen said. In Renton, retail sales dropped 3 percent in 2010, while in the region, they dropped just 1.5 percent, he said.

“The decline here is almost all due to construction and taxable sales in finance and insurance in 2010,” Pedersen said, adding that the future is not all sour.

“Overall, these losses continue to diminish. … We are moving into the positive side at least for the retail trade," he said.

This year, taxable retail sales are expected to increase 4.5 percent, then 5.5 percent in 2012, with a continued rise to 6 percent in 2013.

Pedersen also predicted improving unemployment.

The Puget Sound region has seen three straight quarters of job growth, he said, and has gained back about 24 percent of the jobs lost during the recession.

Most of the recent job growth has been in aerospace, software and exports, while construction has gone unchanged and government jobs continue to decline.

Although Renton expects to see slow employment growth, unemployment will continue to be a problem in the Puget Sound, he said.

“There is this uncertainty and caution that pervades everything,” he said.

State, national economies struggling

The state, meanwhile, is still in tough economic shape.

Gov. Chris Gregoire recently called for a special legislative session in November so that lawmakers, who just passed a two-year budget full of deep spending cuts, can tackle a revised economic forecast that shows the state looking to take in $1.4 billion less than projected just three months ago.

“We are in the fragile aftermath of the Great Recession where a return to normalcy seems like a mirage in the desert – the closer we get to it, the further it moves away,” the Economic and Revenue Forecast Council wrote in its September forecast. “Fear and uncertainty have overwhelmed consumer and business behavior. The risk of a recession has increased significantly.”

(Click on the attached PDF to read the full forecast.)

The national outlook is also grim, with Blue Chip economists now expecting a smaller increase in GDP growth through 2013.

"Anxiety is rising in financial markets," Pedersen said while showing a Financial Stress index chart produced by the St. Louis Federal Reserve.

The real worry, on a national level, is stalled recovery over an extended period of time, Pedersen said.

“Right now it is very difficult to surmise. There are a lot of distractions and uncertainties right now," he said.

Renton City Council Member King Parker took the news in stride.

“It is what it is,” he said. “I look at things through rose-colored glasses: we have land available for development at a good price,” he said, reminding the council “to talk about the things that are good for our community.”