A real-estate economist says the local economy is fundamentally strong, despite aerospace job losses.
EVERETT — No, we’re not in a housing bubble. Now is a good time to ask your boss for a pay raise. And we need to forget about the recession — it was a long time ago.
Those are the conclusions of economist Matthew Gardner.
“I’m an economist, it’s my job to worry and find bad things, that’s why it’s a dismal science,” said Gardner, who works for Windermere Real Estate in Seattle. “I’m trying to find bad things and I’m having a problem with it.”
Even developments that would have given him pause in the past no longer carry the same weight. He pointed to the loss of 6,700 aerospace jobs in the Puget Sound region — including 5,400 in Snohomish County — in the past year.
“If you would have showed me this slide a decade ago, I would have looked at it and said, ‘Buy canned goods, a gun and move to Montana, aerospace is collapsing,’” Gardner said. “Now I’m like, ‘OK, whatever.’ Don’t get me wrong. Boeing and aerospace is remarkably important, but because we continue as a region to diversify, we’re not going the way we did” with the Boeing Bust of 1972.
Gardner spoke before a crowd of about 75 on Wednesday morning at an event put on by Mountain Pacific Bank at the Everett Golf and Country Club.
Mountain Pacific President and CEO Mark Duffy said he felt that Gardner’s assessment was spot on about a wide range of economic topics, including housing and aerospace.
“Losing that many jobs has less of an impact than it used to around here,” Duffy said.
As an economist with a real estate firm, Gardner is most frequently asked whether the region is in a housing bubble. He points to a Google Analytics chart that shows the search term “Housing Bubble” jumped massively in July.
The dynamics that led to the last housing collapse aren’t in play, locally or nationally, he said. Borrowers are more sound. Home building is slow. And more first-time buyers are looking for a home.
“So we have limited supply, we have good demand, we have great credit and we’re not over-leveraged and the interest rates are staying low,” Gardner said. “Housing prospects across America look pretty good as far as I can see.”
The unemployment rate continues to drop locally and nationally as it has for the past several years. And that’s both people actively looking for jobs (the official tally) and those who had once stopped looking but are now returning to the workforce (the unofficial tally). The official rate was 4.3 percent for Snohomish County in August.
While wage growth has been stagnant for a decade, employees are going to start demanding higher wages and they’ll receive them or get hired elsewhere.
“For those of you who are employers, get ready for the staff to start beating your door saying ‘I want a pay raise,’ ” Gardner said. “If you are an employee and you haven’t hit up your boss, it’s a good time to start.”
While all of the traditional indicators point to a strong economy, the last recession lingers in people’s minds.
“Quite frankly, we should be skipping down the street, but we’re not — we’re still remarkably cautious,” Gardner said. “… We’re still not over the recession. That’s what’s fascinating. When did the recession start? Ten years ago in December. A decade. By now, we should be totally forgetting about it, but no, it sticks with us.”
Things on the horizon could cause a change in the outlook. The stock market cannot continue its torrid pace, Gardner said. He expects a correction at some point and the could spark a new recession.
In the county and region, affordability of land might force companies to look elsewhere to build their products. He thinks Amazon will look outside of the region for its second headquarters, because the office space is built out and its employees can’t afford to buy homes.
The amount of student loan debt is staggering. Graduates from 2016 carried nearly $34,000 in student loan debt. He pointed to a statistic that shows one out of five students are in default on their student loans.
“We owe — they owe $1.4 trillion on student loans,” Gardner said. “That’s a big number. Twelve zeroes. What does it really mean? If you take all of our credit card debt as a country, it’s about $870 billion. We owe a third more on student loans than on credit cards.
“Here’s the kicker, you could file bankruptcy as one does and your credit card debt goes away. Your student loan debt doesn’t. It stays with you even through bankruptcy.”
As for Millennials, many wish the Baby Boomers would just retire, go play golf and open up jobs and careers. But that’s not happening. People older than 55 are keeping their jobs to save for health care and other costs. And those people are spending their children’s inheritance.
“We’re not seeing the transfer of wealth between generations that we have seen, because we’re living longer …” Gardner said. “In retirement, I want to die bouncing a check with a modest hangover.”