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Economist: It’ll be ‘some time into next year’ before Puget Sound jobs rebound

Pike Place Market in May 2021. (MyNorthwest photo)

In terms of the local economy, if we just look at housing prices, things look spectacular — that is, if you’re selling a house. Overall, local jobs are starting to come back, but Windermere Chief Economist Matthew Gardner warns there’s still a long ways to go before a full recovery.

“I think what a lot of people are going to be focused on is the year over year change in price, and it’s really quite remarkable,” Gardner told Seattle’s Morning News about housing prices. “In King County, for example, up over 23.5%, up in Snohomish County almost 33%. But I would caution everyone to take those numbers with a bit of a pinch of salt.”

“I say that because remember where we were last May, and so looking at year over year comparisons, quite frankly for anything, is probably going to give you a overly optimistic view of the world,” he added.

A number of financial forecasts are expecting a roaring economy. As Dave Ross says, if the COVID-19 emergency funds were to prevent a recession, it did that, and the concern now is that it may have overcorrected too far the other direction and now we may see inflation as a result.

“Do I expect to see certainly an aggressive growth period going forward to this year and likely probably for most of next year? Yeah, I do,” Gardner replied. “And a lot of it is not just the fact that the government was handing out money. We all know that they were, but we were not, for a long period, spending it.”

Additionally, Gardner pointed out that a lot of people were still working even through COVID-19, and those people weren’t spending their money in the normal manner either.

“So as we reopen, as we feel more comfortable going out, what are we going to do? We’re going to go shopping,” he said. “And with that, that is going to lead to higher inflation levels than we’ve seen, quite frankly, in the last three decades. But at the same time, I just don’t see how we will end up in a similar situation. A lot of people are trying to conflate it with what happened in the 70s and early 80s. It is a very, very different place now.”

Gardner assures we won’t be seeing the mortgage rates of the late 70s and early 80s of 15%.

“In fact, we peaked in October of 1982 at, believe it or not, 20%, if you include points,” he said. “So no, that’s not going to happen. But are we going to go through a period through this year of inflation well above that 2% mark that the Federal Reserve do like to kind of keep an eye on. But I think it’s going to be temporary. I think we’ll see a boost as we, again, feel more comfortable going out, but it’s going to settle back down again once we get into 2022.”

For the Puget Sound economy in particular, Gardner says over 216,000 jobs were lost due to COVID-19 in King and Snohomish counties alone.

“We’ve got back, the latest data I’ve gotten through April, about 103,000 of them,” he said. “So we’re still down by about 113,000 jobs in total. But at the same time, we’ve seen a full recovery in construction employment. They’ve actually got all the jobs back they lost and some.”

“You mentioned information technology sector, that really was negligibly impacted, quite frankly, that has got all their jobs back as well,” he added. “It’s really bifurcated. But without a doubt, even though we’ve seen positive growth in construction, information, and most of the sectors are recovering, we’re still being weighed down a lot, without a doubt, by leisure and hospitality.”

There he says we lost 79,000 jobs and only got 29,000 back.

“So that’s a big issue,” he said. “To say we’re losing our mojo, I wouldn’t go so far as to say that, however, it certainly is unbalanced at the moment.”

‘Quite the conundrum’ as Washington businesses struggle to find workers

In terms of a return to big conventions, events, and crowds, Gardner thinks it will all happen in time, but recognizes there is still an understandable reluctance at this point.

“[Much] of it, naturally, is going to be directed by local governments as to what they allow and what they will not,” he said. “But I certainly am seeing some, I hate to say this word, of course, but some green shoots, shall we say. And I say that because I’m actually now being asked what to appear in person at different venues starting this fall. I haven’t done that since, well, last March.”

“So you start to see those things happening. Now naturally, big conventions, the booking time for those goes out years. So is it going to take a while? Absolutely, it will. However, I think for a lot of people now they’re just zoomed out and they are sick and tired of working their dining tables and meeting people virtually. So it wouldn’t surprise me that once we do feel comfortable — question is, when will that be? — yeah, we’re going to try and get back in the groove that we were in a year and a half ago, hopefully fairly quickly.”

Overall, Gardner still feels optimistic for Seattle’s future and the return of a bustling downtown core.

“Do I think it’s going to look exactly the same? No, I don’t, but … the demise of downtown, I think, as I said before, has been somewhat greatly exaggerated,” he said. “We have issues, there’s no doubt about it, but as businesses start to reopen, and we know a lot of companies are now already setting dates that will require their staff to come back into work, into an office, that is going to help. That’s certainly going to help the downtown retail, also going to help the bars and restaurants and these kinds of things.”

“But in terms of overall employment, I’m afraid that we are not going to get all the jobs that we lost due to COVID back this year,” he added. “It’s going to be some time into next year before we get to that point.”

Listen to Seattle’s Morning News weekday mornings from 5 – 9 a.m. on KIRO Radio, 97.3 FM. Subscribe to the podcast here.

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