Weekend Long Read: Economic Progress Report

by Kevin Schofield

This weekend's "long read" is the Washington State Economic and Revenue Forecast Council's report from last week on how the economic recovery is going, both nationally and locally. In short: "It's complicated."

There is no one metric that gives us a perfect read on the economy; it is very much a multifaceted creature. Economists often start by looking at industrial production, employment, and consumer confidence, and the report definitely includes those, but it provides interesting, insightful charts on several other measures as well, including personal income, home prices, oil prices, and inflation.

Nationally, employment is roaring back, with a net 559,000 jobs added in May. However, there are some interesting trade offs within that number; for example, while employment in food services and drinking establishments increased by 186,000, employment in food and beverage stores dropped by 26,000 — representing our shift to eating out more and cooking at home less as the COVID-19 pandemic starts to fade. In Washington State, we added over 29,000 jobs in March and April and unemployment is holding steady at 5.5%; but overshadowing that is Boeing's ongoing workforce reductions: The company has shed about 19,300 aerospace jobs since the beginning of 2020, and it's expected to lay off another 9,800 by the end of this year.

At the same time, on the national level consumer confidence has recently declined, which the council believes reflects both concerns about the economy and worries about rising inflation.

Residential construction is slowing across the country, but Washington is an exception: Here 63,700 new housing units were permitted in the first quarter of 2021, the highest level since 1978.

Inflation is another place where Washington, and in particular the Seattle area, seem to be on a different path than the country as a whole. While the average inflation for U.S. cities in the 12 months ending in April was 4.2%, it was only 3.4% in Seattle. The higher inflation is apparently being driven by higher energy costs. Surprisingly, shelter cost inflation is at the low end: 2.1% nationally, and only 1.6% in Seattle.

The report includes pages of fairly easy-to-read charts of various economic measures. Of particular note: It looks like the number of Washington renters who are behind on rent payments is starting to creep back up again, after CARES Act relief pushed it down earlier this year.

The good news is that the economy, both nationally and locally, continues to recover. But it won't look exactly like it did before the pandemic — perhaps a good thing — so we need to look past the headlines to understand what's really happening and how we can best prepare for it.

Economic and Revenue Forecast Council Economic Review: June 9, 2021

Featured image is attributed to Marco Verch Professional Photographer (under a Creative Commons, CC BY 2.O license).