Puget Sound Area Economy Struggling to Rebound
May 19, 2011
May 19, 2011
This is the first article in our series on the region’s economic health. Areas to be covered in the future include the Portland metropolitan area, Spokane, and eastern Oregon. The Puget Sound region is defined as Seattle, Tacoma, Everett and the surrounding areas.
The Puget Sound and its credit unions are still trying to find their way out of the Great Recession as any good news includes a dark lining.
For example, major companies are stepping up hiring—Amazon is hiring about 1,900 positions in conjunction with its moving to the shores of South Lake Union, while Boeing is adding a further 1,200 in the Renton area for its 737 project.
Nevertheless, Seattle’s unemployment rate rose slightly to 8.7 percent. This higher rate is not all bad news though, as it could be in part the result of people returning to the job market.
This is a little different from the rest of the state, which saw its seasonally adjusted unemployment rate edge slightly lower in April to 9.1 percent, after the private sector added 8,300 jobs. Much of these gains were in the construction industries, which may be a good sign for the state’s sagging housing market.
Lack of hiring is impacting the area’s credit unions, which are seeing a slight increase in delinquent loans of late.
It should be noted that the Northwest’s credit unions are significantly healthier than their banking brethren, whose delinquent and charge-off rates are much higher following excessive lending during the build-up to the Great Recession.
In addition to employment, inflation is a serious concern for credit unions and their members.
High energy prices are seen as the main culprit, pushing the price for everything from food to cars. West Texas Intermediate crude oil closed at $99.80 on Wednesday, having fallen back from its highs of over $120 in April. This has pushed regular gasoline prices in Washington to $4.02 a gallon, according to AAA, the twelfth highest in the nation.
As a result, consumer spending is expected to decline in the months ahead. This will likely affect loan demand as well, which is already very weak in the Emerald city and the surround region.
Another area of concern for Puget Sound credit unions is the housing market.
The S&P/Case-Shiller index showed the Seattle metropolitan area housing market dropped 1.9 percent from January to February—down 7.5 percent YoY. Zillow, the online real estate company, estimated that the Seattle market has dropped 32 percent from the peak in June 2007, belying previous hopes that the city would avoid the housing bubble woes.
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