The regional economy will create a third of a million new jobs in the next 10 years, but the manufacturing sector will eliminate 16,700. Rather than declining output, it is rapidly rising labor productivity that will cost manufacturing these jobs.
Because people tend to follow the jobs, the regional unemployment rate tends to follow the national unemployment rate. Thus, our forecast of a 5 percent regional unemployment rate in 2023 is not far from the 5.6 percent national rate predicted by the Blue Chip economists. Given the cyclical sensitivity of the jobless rate, however, it would not be surprising if the regional rate turned out to be 4.0 percent or 7.0 percent.
Reflecting the difference in the projected employment growth rates, the Puget Sound region’s population will expand at an annual rate of 1.1, while U.S. population will grow at a 0.8 percent rate. As a consequence, the region will welcome 431,500 new residents in the coming decade.
The average household size is about 2.45 people. The projected population growth suggests a need for 180,000 new single-family homes, condominiums and apartments. But additional homes will have to be built to accommodate the downward trend in household size and to replace older homes. Our 10-year residential building permit forecast calls for 240,000 single-family and multifamily housing units to be built.
Current-dollar personal income will expand by two-thirds between 2013 and 2023. Measured in 2009 dollars, per-capita personal income will rise from $50,230 to $61,100. This implies that the economic welfare of each resident in the Puget Sound region will, on average, increase at a 2 percent annual rate. This is not bad, since the historical rate is 2.1 percent.
With current-dollar personal income rising at a 5.3 percent annual rate during the decade, retail sales as well as taxable retail sales (including new construction) will increase at a 4.8 percent rate. In the long run, retail sales grow more slowly than personal income because, as per-capita income rises, consumers tend to spend less on goods and more on services.
Except for houses, the prices of goods and services are largely determined in the national market. Thus, the regional and national 10-year inflation rates should be about the same. Indeed, we project both rates to average 2.3 percent.