Editor's Note: A Reason for Optimism
Donald Trump notwithstanding, 2017 in Seattle may be brighter than anticipated.
| FROM THE PRINT EDITION |
It’s easy to be pessimistic about the outlook for 2017. After 90 months of growth, the economic expansion is aging and may not have much life left. Interest rates, which have fallen pretty steadily over the past 35 years, seem headed up again. If they reach anywhere near their 100-year average of 5 percent, that could choke off growth. And global trade, which has been on a growth path for 70 years, benefiting our technology, manufacturing and agriculture exports, could hit a wall if President-elect Donald Trump follows through on threats to slap tariffs on partners, triggering a trade war.
But 2017 could well be far more prosperous than we have any right to expect. While Trump may be bad news on issues of immigration and inequality, it’s hard to argue that his plans to slash taxes on business, encourage local manufacturing and raise infrastructure spending won’t be good for business in this region. Michael Butler, CEO of Cascadia Capital, who has done a booming business representing entrepreneurs who want to sell their companies, says some clients are now putting off plans to sell their firms, believing the economic outlook is now much brighter.
Even if Trump’s pro-business policies don’t come to pass, there is a strong argument to be made that the Seattle region will continue to prosper. When it comes to new infrastructure spending, for example, our region has enough projects in the pipeline to keep workers busy for years, including tens of billions of dollars in new Sound Transit spending, the remodeling of Sea-Tac Airport, the convention center addition and the Manhattanization of downtown Seattle.
And the number of new jobs posted continues to rise, driven by strong growth among the region’s ever-expanding tech sector. “We don’t fully appreciate the number of jobs, people and households that will be added over this next cycle,” says Peter Orser, director of the UW’s Runstad Center for Real Estate Studies. Despite an unprecedented building boom during the past five years, Orser says the region has failed to keep up with housing demand, adding just a fourth the number of residential units needed to house the new residents moving into the area.
Just five years ago, few institutional and international investors paid much attention to Seattle. “Today, we are their darling,” says Orser. The inflow of new money and young talent is “fueling investment in development, the UW, buildings and new ideas at a scale that is exponentially greater than five years ago.”
While there will be cyclical corrections as we overbuild, Orser says it would take “a major event” to knock the regional economy off its trajectory of rapid growth. “I don’t see job creation slowing,” he says. “I see a shortage of labor, land, investment dollars and housing. The breadth and depth of the economy is radically different [from five years ago].”
Matt McIlwain, managing director at Madrona Venture Group, agrees, pointing to Seattle’s strength in rapidly growing technology sectors like cloud computing, virtual reality and “intelligent applications” that incorporate the power of big data, the cloud and artificial intelligence.
More needs to be done to retrain local residents for the jobs being created, build affordable housing and improve transportation infrastructure. But if Orser and McIlwain are right, our economy will continue to be strong enough to expand financing for such activities.
LESLIE HELM is executive editor of Seattle Business magazine. Reach him at email@example.com.