Economy tough but will get better, panel says

The economy is tough and it will get worse before better — but with hard work and optimism, it will turn, a panel of government and private business officials said.

“I look at my 401K, now it's a 201K... yeah, times are tough,” said Bellevue resident George Northcroft, King County director of business relations and economic development.

He and others spoke at the Jan. 13 Economic Forecast Breakfast in Federal Way.

A review of real estate, transportation, the green sector, health care and Pierce and King county issues, as they pertain to 2008 and are forecasted to apply to 2009, were presented by a panel of experts.

Real estate: Retailers closed down left and right in 2008, as approximately 8,000 businesses called it quits, said Jeff Lyon, chief executive officer of GVA Kidder Mathews. Another 16,000 retailers are expected to go out of business this year, Lyon said.

Large regional powerhouses, such as Weyerhaeuser and Boeing, are laying off employees. Microsoft, too, is rumored to be considering layoffs or cutbacks.

Businesses that survived 2008 will need all the assistance they can get, Lyon said. Landlords will be smart to work with owners to help them in any, he added, noting that a vacated storefront could stand that way for a few

years to come if the retailer is forced to leave.

The success of the real estate market is driven by the capital market, Lyon said. When that improves, so too will the real estate market.

“I think we'll see some light at the end of the tunnel when the capital goes up,” Lyon said.

Transportation: Transportation saw breakthroughs and drawbacks in 2008. Sound Transit's ST2, a mass transit plan that includes extending light rail and expanding bus services, was approved by voters this past November. Additionally, after years of waiting, Gov. Chris

Gregoire finally announced a plan Tuesday for improving the Alaskan Way Viaduct. The Seattle-Tacoma International Airport saw the addition of a third runway and is doing favorably compared to other national airports, said Mark Reis, aviation director for the Port of Seattle.

Seaports will feel the economic impact as growing unemployment rates in China are expected to force the country to decrease its exports to the United States, Reis said. The Port of Seattle and Port of Tacoma both face competition in 2009 from new and expanded ports located closer to Asia, he said.

“I wish I could change the tone of the conversation from the somewhat negative to the positive, but I don't have a whole lot of good news,” Reis said.

Green/environmental sector: The Puget Sound region has embraced the green sector. Resources and desires to build the industry are abundant in the region. And with President-elect Barack Obama's stimulus package, the sector has the potential to grow substantially, said Steve Dunphy, vice president of strategy and communications for Cascade Land Conservancy.

The region is environmentally conscious. It even has the workforce, resources and technology to produce electric and environmentally friendly vehicles, Northcroft said.

“We have the capability of being the next Detroit if we want to be,” he said.

But there are drawbacks. The green sector could follow the path of

that blazed by the technology industry. It was proceeded with a lot of talk and support in the region, but did not produce as many jobs as predicted, Dunphy said.

Health care: The health care field is not exempt from the impacts of the recession, said Tony McLean, chief operating officer at St. Francis Hospital in Federal Way. Elective procedures have declined and the severely ill continue to seek medical attention. Hospitals lack money for operating and meeting growing needs, he said.

“My take-home message is, in health care, historically, the myth is we are recession proof. That is not true,” McLean said.

Political issues: Counties, businesses, local governments and communities working together will help offset the effects of the failing economy, Northcroft said. The region has experienced this kind of recession in the past. In fact, 2001-2002 brought skyrocketing unemployment rates, he said.

King County has an excellent bond rating and county executive Ron Sims has direct access to the Obama team, Northcroft said.

Recovery from the current economic state will come, but it will not be evenly distributed, said Dick Davis, president of Washington Research Council. For the Puget Sound to get ahead, it will require direct action — driven by state and local governments, business owners, community leaders and residents.

“There's very little reason for us to be complacent,” Davis said.

Jacinda Howard is a reporter for the Federal Way Mirror. Contact her at jhoward@federalwaymirror.com or 253-925-5565.