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Local economy forecast to stay healthy in 2007
Boeing, Microsoft will help in job growth
By CRAIG HARRIS
P-I REPORTER
Thanks in part to the strength of business heavyweights Boeing Co. and Microsoft Corp., the local economy should do just fine this year.
However, 2007 won't be as good as 2006.
That was the assessment of Dick Conway, a well-respected regional economist, who forecast a healthy 2.9 percent annual employment growth for the Puget Sound area and a modest 4.6 percent unemployment rate for the year.
"The chance of a recession in the Puget Sound region any time soon seems remote," Conway told about 500 people at the 35th annual economic forecast conference in downtown Seattle.
On the national stage, America's economy will be "stuck in the slow lane," Ken Goldstein of the Conference Board said.
Goldstein, who shared the podium with Conway in the Washington State Convention and Trade Center, said the U.S. economy would cool to a 2.6 percent growth rate this year, down from the 3.4 percent growth last year.
Conway, who has produced more than 150 publications and research reports on regional economic analysis, said the nation's sagging housing market would play a major role in the U.S. economy. While he believes home prices will not fall locally in 2007, existing U.S. home sales during the past year have dropped 12 percent and the average home price has fallen 3 percent, according to October figures.
However, Conway said there are numerous factors that should keep the Puget Sound region -- King, Snohomish, Pierce and Kitsap counties -- humming along. He said they include:
Boeing's robust sales of the 787 Dreamliner and the expected increase of thousands of local aerospace jobs over the next two years.
Microsoft's spending on research and development and his prediction the company would hire 2,000 more employees this year and in 2008. Microsoft could not be reached to confirm that figure.
Consensus among national economists that the U.S. economy, which has lagged behind the regional economy, should do moderately well in 2007 and there would not be a recession.
U.S. exports are expected to grow at a 9 percent rate because of a strong world economy and a weak dollar, and the Puget Sound area benefits by being the nation's top trading region.
An increase in wages and a low unemployment rate should allow retailers to enjoy another strong year.
Meanwhile, the wild card for the nation's economic growth is gas prices, Goldstein said.
He said it wouldn't surprise him if oil prices shot back up to last year's levels, when they exceeded $60 a barrel, which would increase prices at the pump.
Oil prices rallied more than $1 Wednesday to close above $52 after floundering through a volatile trading session that saw crude briefly bottom at a 19- month low.
A barrel of crude fetched $41 on average in 2004 and $30 in 2003, according to estimates by Oppenheimer & Co. analyst Fadel Gheit.
Gasoline prices, which surged to record levels above $3 per gallon last summer, have come down along with the price of crude. The average price of unleaded gasoline nationwide is about $2.22, AAA says.
"The era of $1.50 for a gallon of gasoline is over," Goldstein said. "It will never come back."
This report includes information from The Associated Press. P-I reporter Craig Harris can be reached at 206-448-8138 or
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