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Analysts predict economic recovery: Boeing will select Washington for 7E7, local economists say 7E7 to be built here By Cydney Gillis, Business Reporter King County Journal
September 26, 2003
The layoffs will continue, but good times -- and 54,000 new jobs -- are finally expected in the Puget Sound area in the next two years.
And if The Boeing Co. chooses to build its new 7E7 jetliner in Washington state, as Seattle economists Dick Conway and Doug Pedersen predicted Thursday, the numbers could be thousands higher.
``We do believe the 7E7 is going to be built here,'' Conway told a business group Thursday in Seattle. ``The cost and risk of building a plant elsewhere is just too great.''
In the meantime, the four counties of King, Pierce, Snohomish and Kitsap are bumping along in a so-called ``jobless recovery'' that is dampening job growth for now -- thanks, in part, to over-investment in technology and telecommunications during the boom years of the late `90s, Pedersen said.
As a result, 2003 will end with a slight job loss of two-tenths of one percent -- much better than the 2.5 percent the region lost in 2002 in the wake of the dot-com bust.
In 2004, however, job growth will start to pick up -- by 1.1 percent in 2004 and 2.1 percent in 2005 -- to create 54,000 new jobs, which will reduce unemployment rolls from today's high of 6.9 percent to 6.3 percent in two years.
Without counting the wild card of the 7E7, Conway said Boeing is already seeing an upturn in orders and is expected to add 15,000 to 20,000 jobs by 2008 -- contributing to 3 percent overall job growth in the region in 2007 and 2008 due to what's known as the ``Boeing multiplier.''
The rule of thumb is that when Boeing adds 8,000 jobs in a year, the region as a whole adds 60,000, Conway said. When it cuts 8,000 jobs in a year, he added, the region adds only 18,000 jobs in a year.
Since the Sept. 11 attacks of 2001, the aerospace giant has cut 28,000 jobs, contributing to a regional job decline of 4.6 percent, or 80,500, since the employment peak at the end of 2000.
In July, Boeing said it will cut another 4,000 local jobs. But, ``This year's round of layoffs should be coming to an end,'' Conway said, resulting in stabilizing work force.
``Boeing has been a drag on the economy,'' Conway added. ``Simply removing the drag will give the economy a lift.''
Aside from Boeing recalling its workers, most of the 54,000 job gains in the next two years won't help those already laid off, the economists said. Unlike previous recessions, Pedersen explained, the job cuts that took place in the recession of 2001 will be permanent -- signaling what Pedersen called a massive structural shift in the U.S. economy.
The shift is toward trade and services, with manufacturers such as Boeing operating much leaner than before.
Still, ``We're on an improving growth path,'' Pedersen said. ``(It's) a national economy on the mend.''
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