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Economic forecast is mostly sunny
But clouds could form if a conflict with Iran hikes fuel prices nationwide.
A prominent Northwest economist expects a warm business climate for 2006 as strong trade winds continue to blow from Asia, holding recessionary clouds over Puget Sound at bay.
Theres a trade boom happening, said Tom Cox, host of the PBS program Serious Money, during a presentation Wednesday hosted by the Bainbridge Island Chamber of Commerce at Wing Point Golf and Country Club. Puget Sounds in the ideal place with all thats going on with Asia.
Cox cited Chinas fast-growing cities and industrial strength as two of the keys to the Northwests continued economic progress.
In China, the national symbol is the crane, he said. Not the bird anymore, but the construction crane.
Urban building is happening at such a high rate that Cox estimates China adds a Houston-sized city each month.
Trade with China and other Asian countries has helped resuscitate the sounds lagging manufacturing sector. Boeing clinched the largest number of orders in its history last year. Nearly 40 percent of Boeings orders in 2005 came from Asia and the Middle East, with 120 orders coming in from China.
Cox doesnt expect the aircraft giants workload to increase as substantially next year, but the list of orders will keep the sounds workers busy throughout 06.
Boeing now has a backlog of 1,500, he said. Now we have to see if they can produce and deliver at the cost they said they would.
Regional software, biotech, banking and steel recyclers also recorded high investor returns or record profits last year. Cox highlighted companies like aQuantive, a Seattle-based online advertiser, and Portlands Schnitzer Steel for particularly strong growth over the next five years.
Tourism will increasingly take on a more prominent role in the sounds economy, Cox predicted.
Over 200 cruise ships are expected to visit Seattle in 06, he said. That didnt exist six or seven years ago. It went from zero to a whole lot in not a lot of time.
According to Cox, a growing Northwest economy, particularly in the Seattle and Portland areas, helped create 127,000 new jobs last year in the region, which includes Alaska, Montana and Idaho.
The Northwest will continue to see an influx of people, particularly from California, seeking the regions relatively well-paid jobs.
But dont expect a steady flow of new residents to continue the sounds fast rise in home prices, Cox advised.
The bubbles not going to burst, he said. But were going to have a slow deflation.
While the future of the regions economy looks rosy, Cox stressed that the Northwest is not immune to national trends.
He said consumers are tapped out by credit card debt, second mortgages and other overspending habits.
There were more bankruptcies than college degrees over the last few years, he said. Credits stretched tighter than Joan Rivers neck. I think the day of reckoning is upon us.
Cox also predicts dark days ahead as fuel prices rise and U.S. oil supplies are threatened by tense foreign relationships.
Energy prices are going to be exceedingly painful, he said. With Iran, if theres a confrontation, prices will go up and it will have a devastating effect on the national economy.