The party’s officially over.
The committee that calls the beginnings and ends of recessions said this past week that the record 128-month economy expansion stopped in February.
The elevator speech is that Seattle did very well during the historic up-cycle, enjoying a transformational decade of high growth and becoming a superstar city. With Amazon and Microsoft, the region hosts the headquarters of two of the five Big Tech giants.
But much more was at work — and early in the Great Recession, it appeared that we faced a bleak future.
Seattle was wounded by the collapse of Washington Mutual during the financial panic of fall 2008. The company’s downtown headquarters lost 4,000 jobs, with thousands more cut at vendors. Earlier that year, insurer Safeco was acquired by Liberty Mutual. Those events ended Seattle’s status as a major financial center.
Around the same time, Boeing was struggling with delays of its much-hyped 787 Dreamliner. Some worried that the advanced airliner might become an unsustainable drag on the company as it dealt with the recession.
Yet another kick in the head was the loss of the NBA’s Sonics, which moved to Oklahoma City in 2008. Hearst Corp. shut the print edition of the Seattle Post-Intelligencer. Many beloved small businesses closed.
Job losses proliferated around the region, including the first mass layoffs at Microsoft, which was still struggling with its “lost decade.” From November 2009 to March 2010, the unemployment rate in the Seattle-Tacoma-Bellevue metro area peaked at 10% (The Great Recession officially lasted from December 2007 to June 2009; the recession arrived later here and unemployment lagged).
During the subsequent recovery, unemployment here fell slightly faster than the national rate, however. (It was down to 3.1% here in February and 3.5% nationally.) The civilian labor force here grew by more than 320,000 during the expansion. Year over year,T percent change here far outpaced the national average.
The biggest driver of the turnaround was Amazon, especially its move to South Lake Union and the Denny Triangle in the heart of the city. The company, which became a leader not only in e-commerce but also cloud computing, grew from 5,000 jobs here in 2010 to about 53,500 this past year.
Having such a large corporate headquarters in a downtown is extremely rare, and it was made possible by the late Paul Allen’s Vulcan remaking the abandoned car lots and low-end shops of South Lake Union. But Amazon was not alone as the economic engine.
The Bill and Melinda Gates Foundation opened its headquarters nearby. The Fred Hutchinson Cancer Care Research Center anchored the north end of South Lake Union. Other health research institutions followed, including a UW Medicine research facility.
Bay Area tech companies also came to the district and other locations in the region. Among them: Apple, Google and Facebook.
The city also saw growth of such tech outfits as Zillow, Tableau and F5 Networks, as well as numerous startups.
All these brought high-skilled, highly paid jobs. Downstream are such operations as data centers, which pay less and provide fewer jobs, although states and cities less fortunate than us spend big on incentives to lure them.
Partly at work is what might be called the Seattle Paradox. Although housing prices shot up here, we remained less expensive than the Bay Area while offering the amenities that tech talent demands.
Seattle’s tech-centric economy proved fortuitous because, in an otherwise slow rebound, this was the one sector that enjoyed smart growth. The region was also largely spared the pain of single-family residential overbuilding, which burdened Sunbelt cities for years after the crash.
But still, other forces were in place.
Boeing got past the Dreamliner crisis and launched a new version of the 777 and, before it came to grief, the 737 MAX. Microsoft snapped out of the lost decade and again became a leader. The maritime sector remained strong, and the destructive competition between the ports of Seattle and Tacoma ended when the two formed the Northwest Seaport Alliance in 2015.
Trade was also important to the recovery. Washington’s merchandise exports grew from $52 billion in 2009 to a peak of nearly $91 billion in 2014 (because of the trade war and a global slowdown, exports fell to around $60 billion in 2019).
Finally, Seattle benefited from the growing appeal to young talent — and the resulting move of companies — of downtown and nearby city neighborhoods. For years in the 2010s, Seattle was America’s crane capital as new buildings went up, helping swell the city’s treasury and enabling huge social-service spending.
Seattle’s boom brought problems, too, as a homeless crisis was declared and inequality decried. Politics saw a historic shift with the 2015 move to district representation on City Council. The old liberal consensus shifted with a farther left cohort .
Some measures, such as the $15 minimum wage, succeeded — but I’ve argued this was made possible because of the business boom that the far left hates. A jobs tax that would have affected 600 companies — concealed as an “Amazon tax” — was passed in 2018, then hastily repealed. It will be back, downturn or not.
Not surprisingly, Amazon launched a search for an HQ2. Almost 240 localities responded, offering incentives for a “problem” that Seattle won for nothing (and that pays big taxes here already). Amazon is moving ahead with a more “business-friendly” alternative in northern Virginia.
But it’s a complicated situation. Blue cities do better than red ones. The question the latter years of the expansion asked was whether there was a tipping point where progressive politics destroy the golden goose.
We’re still waiting for the answer, in an entirely different environment than the long expansion.