A bad recession could drag down Washington state, but the state enjoys strengths that have cushioned the worst of the blows.

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Washington state is taking some shrapnel from what is increasingly being seen as a national recession. But the trigger event of a housing bust has yet to arrive in force. The complex offshoots of the bust, such as the exotic investment vehicles that sank Bear Stearns on March 14, are largely an abstraction.

Locally, the Puget Sound economy ended 2007 with a host of strengths, many of which are continuing into this year. The biggest danger is the depth and length of the national downturn, which has caught the attention of generally bullish economists.

“If things get really bad, we’ll have all sorts of problems,” said Dick Startz, an economics professor at the University of Washington, who thinks a recession is still unlikely.

Michael Parks, publisher of Marple’s Pacific Northwest Letter and the dean of regional economy watchers, said, “We’re obviously not immune to what’s happening in the national and global economy. We [the nation] came awfully close to systemic failure over the weekend” of the Bear Stearns debacle.

And these are the optimists.

Washington residents have been feeling the economic headwinds for months, in rising gasoline prices, higher costs for consumer goods, adjustable mortgages resetting upward and, in an increasing number of cases, foreclosures. Housing sales are softening and prices are flat.

Still, the state enjoys strengths that have cushioned the worst of the blows.

• Much of the world economy is still booming, a boon to an export-rich state. Parks said Washington exported more than $10,000 per capita in 2007, the first time any state has reached that milestone. That translates to 20 percent of the state’s gross domestic product connected to exports.

Among the big winners: Washington wheat farmers, capitalizing on a huge run-up in worldwide demand. The weaker dollar helps exporters by making American goods cheaper.

• Manufacturers (think aerospace) added jobs in 2007 while most states saw them continue to shrink (think cars).

• Microsoft and much of the software and technology sectors are still hiring.

• The state continued to benefit from above-average population growth and income growth.

“The most interesting thing so far is that we seem to be a lot less affected than other places,” said UW’s Startz.

Unfortunately, as events last weekend showed, not even the smartest financial wizards on the planet understand all the causes of the credit crisis and market turmoil. No less an authority than former Treasury Secretary Robert Rubin told The New York Times he didn’t understand them all.

What began as the pricking of a housing bubble has spread over the past seven months into most parts of the economy. Even solid companies and municipalities have had trouble getting loans or selling bonds. The complexity of many financial instruments and the interrelationships among banks have made it difficult to root out the bad bets and keep them from contaminating the system.

The housing bust presents perhaps the most serious obstacle to recovery, according to Douglas Cliggott, chief investment officer for Dover Management.

“It’s hard to have an interest rate that makes it attractive to buy an asset that’s going down,” he said. Falling housing prices along with inflation concerns limit the Federal Reserve’s ability to stave off recession. By contrast, housing appreciation was higher than the costs of borrowing in the early 2000s.

Some of this is playing out here profoundly with Washington Mutual, which employs 4,400 in Seattle and occupies some of downtown’s best office space. Caught in the subprime-mortgage debacle, WaMu has seen its shares drop by about 75 percent over the past year. The company has already said it would lay off 500 workers in Washington, as part of a cut of 3,150 positions.

WaMu’s troubles endanger a major corporate headquarters, meaning a potential loss of large numbers of well-paid jobs and local giving. And that’s what Wall Street would consider a good outcome — a buyout, which looks unlikely. Otherwise, WaMu will be left to work out its troubles, leaving the area without the economic boost from the institution’s growth years. And if history is a guide, it will still be acquired at the end of the process.

WaMu won’t be the only part of the local backbone to suffer if the recession is prolonged.

Boeing, already stunned by the loss of the Air Force tanker program, could begin to pay a serious financial price for delays in the 787, undercutting its best selling point as fuel-efficient.

Cuts in consumer spending also could damage such leading companies as Microsoft, Amazon and Starbucks.

These companies are responsible for vast wealth creation, through everything from payrolls and the returns for their many local shareholders to their contracts with local vendors.

A continuing credit crunch will reach Washington businesses and could even influence venture capital, a key component of Seattle’s innovation machine.

All these “what ifs” might have seemed alarmist even two months ago. Not now.

On the other hand — and this is why blunt-spoken President Harry Truman wished for a “one-handed economist” — the optimists may yet carry the day. In 2008, “it will just not boom here as much,” said UW’s Startz.

That was the lesson of the past week. Nobody really knows.

Times columnist Jon Talton is a journalist and author living in Seattle. For more than 20 years he has covered business and finance, specializing in urban economies, energy, real estate and economics, and public policy. You may reach Jon Talton at jtalton@seattletimes.com