What forces will shape local economy in 2015?
Amazon, the ports, Gov. Inslee are among the factors to watch as Seattle’s booming economy heads into the new year.
Special to The Seattle Times
First some accountability for last year’s 2014 markers of economic importance for the Puget Sound region:
Winning the 777X? A new chief executive for Microsoft? A $15-an-hour minimum wage in Seattle? Check, check and check.
Investors continuing to believe in the Amazon magic? Meh.
The worst didn't happen with an Asian slowdown or confrontation.
What I didn’t see coming: the speed at which the Ports of Seattle and Tacoma moved to create a seaport alliance, the sustained power of the Seattle boom and the collapse in oil prices.
Now it’s time to look ahead. Regular readers know I don’t make predictions but lay down markers to watch.
With construction under way for enough space to house 71,000 employees in the next five years, Seattle’s economy is closely tied to the fortunes of this technology giant.
Building Amazon’s headquarters in the heart of the city instead of the suburbs has been a tremendous gift. CEO Jeff Bezos wants to attract the top talent that seeks a vibrant urban environment, and he rightly says the urban setting is better for the planet.
But the company’s lack of steady profits brings risks.
Amazon faces a host of challenges, from pressure on Wall Street to unfavorable comparisons among investors to Google and Alibaba, as well as continued criticism of its treatment of employees, tax dodges and unfair control of the supply chain.
This is sure to unspool one way or the other in 2015. If Amazon’s stock collapses or it faces costly tussles with government, it would be a serious challenge to the biggest source of Seattle’s booming economy.
If all goes as scheduled, Seattle and Tacoma will implement their seaport alliance next year. The stakes are huge because Puget Sound has been losing overall market share in container traffic.
Reversing this trend is essential, and it won’t be easy in a time of consolidating shipping lines, bigger ships potentially making fewer calls, competition from rival ports, an indifferent Legislature and the expanded Panama Canal in 2016.
More broadly, Seattle needs to sustain and keep its broader maritime sectors. They are a source of middle-class jobs in a metro area increasingly dominated by tech positions at the top and vast numbers of low-paid service workers at the bottom.
The Inslee agenda
Gov. Jay Inslee is offering a visionary and controversial plan to tax capital gains and institute a cap-and-trade program that would tax polluters.
The easy call is that the giant Wormhole of No called Olympia will suck it in and destroy it. But the proposals cut to critical questions about the state’s future.
Washington has one of the most regressive tax systems in the nation along with criminally underfunded schools and inadequate infrastructure. Aside from being unfair to our citizens, the status quo endangers a prosperous future.
Meanwhile, every level of government must act to slow the damage of climate change. Denial is not a strategy.
How long will the Seattle boom/bubble last?
If I knew that answer, I wouldn’t need this columnist gig. Aside from the risks with Amazon and the maritime sector, let’s add the danger of overbuilding, inadequate transportation infrastructure for a big city and the chance for another wild pitch from Boeing.
Otherwise, the economy will heavily depend on what happens in the nation and world.
“The United States is the pace car for global growth,” said Stephen Wood, chief market strategist for Seattle-based Russell Investments.
But the engine will depend heavily on how the Federal Reserve returns to normal from the extraordinary measures used to buoy the economy during the recession. Russell anticipates a modest rise in interest rates in the second half of 2015, provided growth continues.
A stock-market correction could ruin Puget Sound’s day. Few mainstream seers anticipate anything serious. But this is an aging bull market.
Falling oil prices have scrambled many assumptions. They are likely to stay low or drop further at least in the early part of the year. What’s not to like? The billions in risky debt taken on by drillers. And the potential added CO2 dumped into the atmosphere.
As always, Asia will be of great importance. China continues slowing. Abenomics has so far failed to lift Japan. This didn’t seem to hurt Washington exports this year. But deeper contractions would raise worries.
Then we must contend with the other Washington. Republicans will assume control of both branches of Congress. Expect many conflicts with President Obama, including over whether the United States will attempt to address climate change.
If they rise to another threat of default or government shutdown, the outlook could darken considerably. At best, we’re sure to suffer from continued weak investment in infrastructure and research.
Thank you for reading this year. I wish you the best in 2015.
You may reach Jon Talton at email@example.com
About Jon Talton
Jon Talton comments on economic trends and turning points, putting them into context with people, place and the environment in the Pacific Northwest