Reversing the downturn
Analysts predict modest job growth for Inland Northwest in '03

Tom Sowa
Staff writer

Click image to enlarge At a glance Interview with Jeannine Marx

The region's economy was so bad last year that Dave Lenartz shut down the Spokane technology company he'd run for 12 years and took a six-month cruise with his wife.

They sailed along the West Coast and the San Juan Islands.

"It felt like my going away was a way to let the economy heal after 9/11," he said.

Lenartz, 42, has since returned to Spokane, landing a management job with tech startup Tool Builders.

Like Lenartz, most area economists agree the region's business climate is starting to improve.

When asked about job growth, experts contend 2003 should see modest improvement.

"We've turned the corner, in terms of not seeing any more major layoffs," said Randy Barcus, chief economist for Avista Corp.

Surveying the damage from layoffs in 2001 and 2002, Barcus predicts the region will gain about 2,400 new jobs in 2003. About two-thirds of that 1 percent growth will occur in Spokane, with the rest in North Idaho.

By comparison, Spokane County's job growth measured 1.8 percent three years ago. In 2000, the growth rate was as high as 2.1 percent -- a net increase of 4,000 jobs that year in Spokane.

If the region picks up 2,400 new jobs in 2003, it should soften the unemployment rates in both Spokane and Kootenai counties, Barcus said.

Jobless numbers for December, the most recent data available, show Spokane County's unemployment rate at 6.4 percent. Kootenai County's rate was 8 percent.

Any gains the region makes, however, won't offset the extensive losses in primary job sectors such as manufacturing, mining, air travel and construction.

"It's still not a healthy economy," said retired banker Phil Kuharski, who tracks business trends for several publications and the Spokane Regional Chamber of Commerce.

"I'm more pessimistic than Randy Barcus," he said, predicting growth of just half of 1 percent.

When communities lose primary jobs, the impact ripples throughout the economy, Kuharski said. The loss of good-paying jobs last year at Boeing, Kaiser, Agilent and Telect not only eliminated a healthy chunk of the region's family-wage jobs, it caused a reduction in spending.

Losing 1,000 manufacturing jobs and 200 construction and mining jobs last year had a ripple effect. Spokane County in the same period also lost nearly 1,000 jobs in wholesale and retail trade.

Job growth, considered one of the best indicators of an economy's overall health, is "the key step in building a region where our children can find good-paying jobs," said Jeannine Marx, owner of JM Recruiting, a Spokane-area recruitment company.

But analysts don't predict uniform growth in the region during the next year or two.

"The areas of the economy doing well right now are business services, government and financial services," said Avista Corp.'s Barcus. Continued growth is also expected in the health care industry, both in Spokane and North Idaho.

In the Panhandle's five counties, for example, health-service jobs grew by 150 from December 2001 to December 2002, said Kathryn Tacke, regional labor economist for North Idaho.

Of those jobs, 80 were at Kootenai Medical Center in Coeur d'Alene.

Job growth for the coming year, said Barcus, will be "driven by population, as opposed to company-driven."

With companies spending less on expansion and payroll, population growth becomes the key driver for job creation. That, said Barcus, explains the 700 new jobs created in Spokane County school districts during 2002.

"That also means, for the most part, that residential housing will do OK this year, too," Barcus said.

Financial service jobs should also increase this year, he said, especially in the areas of mortgage processing, bank loans and real estate transactions.

Viewed historically, observers like Barcus and Marx believe the current economy is anemic but bearable.

Marx said the most significant difference between the current economy and past recessions is the inability to see signs of recovery.

"We've had dim visibility before, but it's never been so foggy before. It's hard, as a business person, to see the light at the end of the tunnel," Marx said.

Casting uncertainty over the recovery is the unrest in the Middle East and Washington state's fragile economy, Marx and Barcus said.

Kuharski makes a connection between that uncertainty and reluctance by regional corporations to invest in future growth.

"The big concern among area businesses is they're not spending money on investment. There's not enough visibility (about return on investment)."

What can help, he added, are efforts by government leaders at the state and local levels to support investment and job growth.

"Given our advantages, there's no reason we can't be a center for strong job expansion in the next few years," he said.

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