The Spokane region, with its diversified economy of military, manufacturing, government, health care, construction, financial services, natural resources and retail, is generally impervious to many of the economic highs and lows of the more concentrated West Side.

But, when the market bubble burst and terrorists struck New York and Washington, D.C., the region was swept up in the downturn.

Today, the Northwest holds the dubious distinction of having among the nation's highest unemployment rates, trailing only Alaska. As of the most recent December numbers, the unemployment rate was 6.8 percent in Washington, 7 percent in Oregon and 5.6 percent in Idaho. Locally, the jobless rate is 6.4 percent in Spokane County and 8 percent in Kootenai County.

Returning to the economic level of early 2000 is years away at best, but there are signs.

Shaun O'L. Higgins, director of sales and marketing for The Spokesman-Review, spoke in early February to Spokane advertising and business professionals about the economy. Using data from Sales and Marketing Management magazine, Higgins analyzed the region's buying power.

Higgins said the numbers indicate that housing is still affordable in the region and people have money left over for repairs and remodeling.

With the amount of money being spent on home-building materials, the market for existing home sales is uncertain, according to Realtors. If interest rates increase and job creation remains depressed, housing sales and starts could suffer.

Last year, housing sales hit record levels, fueled by interest rates that fell below 6 percent for a 30-year term, the lowest in 40 years, said Bob Boyer, a senior loan officer at Washington Trust.

The resulting spending helped stabilize the wobbly economy. Mortgage refinancing freed up much-needed cash and generated new income for the region's financial institutions.

The question for the region's largest lenders is whether they can match the outstanding performance of 2002.

Uncertainty also clouds the local health-care industry, which is worried about Mideast unrest.

Tom White, chief executive officer of Empire Health Services, said the government won't make necessary changes to the nation's health-care system while it concentrates on war.

That's not good news for the coming year. Hospitals and clinics in the Spokane region depend heavily on federal insurance programs such as Medicaid and Medicare to pay the bills of Spokane patients. If those reimbursement rates fail to keep pace with rising costs, area hospitals have said they may scale back some services.

A bright spot for Spokane in 2002 was tourism. Frugal vacationers decided to make the most out of area attractions.

With demand for hotel rooms on the rise, Spokane County added 587 rooms last year. The benefits are expected to spill into 2003 as the economy limps along.

In Idaho, however, lodging receipts dipped for the first time in 15 years.

While the downturn in the telecommunications and technology sectors reached into Spokane and Coeur d'Alene, most of the jobs lost were in electronics assembly. On the positive side, those cuts did not siphon away entrepreneurs or their ideas.

Several local technology companies are poised for growth, including World Wide Packets and Vivato Inc. If the telecom sector can find its footing, there's a belief that Telect could emerge from its financial crisis.

As usual, the farming outlook is hazy. The new federal farm bill ensures agriculture will remain a vital spoke in the regional economy. Farmers this year are enjoying a mild winter with rains that are soaking into the ground. Average moisture in May and June should help produce a good crop.

Like every sector of the Spokane economy, though, farmers are nervous about global conflicts. About 85 percent of the wheat grown in the Pacific Northwest is exported to countries unhappy with the U.S. stance on Iraq.

With such outside events beyond local control, Higgins said the region continues to do what it can to prepare for better times.

Despite the doldrums, downtown Spokane has seen a development renaissance, spurred by the renovation of the Davenport Hotel and the redevelopment of River Park Square. The Spokane Valley Mall and nearby Mirabeau Point have also expanded.

Other changes, said Higgins, are more symbolic than financial, such as the excitement generated by the two new cities of Spokane Valley and Liberty Lake, the public relations bonanza of Skate America, and the people of North Idaho flushing the Aryan Nations out of the state.

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