The year 2008 has been a tough one for the United States economy. The collapse of the housing bubble has snowballed through the financial and construction industries and wiped out the growth in home equity that had fueled consumer spending. The U.S. has lost over 400,000 jobs in the first half of 2008, ending what had been, at best, a lackluster recovery from the 2001 recession.
Washington State is feeling the effects of the slowdown, but the state’s economy is in far better shape than the nation’s as a whole. Jobs here continued to grow through the first half of 2008, although at only half the pace of the previous three years.
Washington’s experience in 2008 is quite a contrast to the last recession. The collapse of the dot‐com bubble and the sharp decline in manufacturing – especially in aerospace – that preceded the 2001 recession hit Washington’s economy hard. Through 2002 and 2003, Washington had one of the highest unemployment rates in the country. King County, which includes the city of Seattle and 40%ofthe state’s employment, lost jobs three years running. While other parts of the state bounced back from that recession fairly quickly, King County did not regain its 2000 job level until 2007.
In contrast, halfway through 2008, both information and aerospace jobs are still ticking up. Job growth has leveled off in most parts of the state, but continues to be strong in King County. It’s far too early to tell whether Washington will avoid the worst of this recession, although we might. At the same time, Washington is embedded in national and world markets. The housing market in Washington has not totally collapsed, as it has in some regions, but the boom has come to a decided end. Foreclosures are up, home prices down, and sales slow. High gas and food prices, along with generally high inflation, are making deep dents in family budgets.
Most families are not prepared for another recession. Although median household incomes in Washington rose steadily relative to inflation from the early part of the decade through 2007, that increase was not enough to regain the buying power that was lost with the recession that launched the decade. For the entire second half of the 20th century, each cycle of economic expansion ended with American families being a little better off than they were before, but not this time. Today, middle‐income families across the United States are worse off than they were at the end of the 1990s. A less obvious but equally significant contributor to family economic insecurity is the growth in inequality over this last economic expansion. In this respect, as with median incomes, Washington’s experience mirrors that of most of the country. Over the past decade, the wealthiest households have enjoyed rising incomes, while moderate‐ and low‐income families have barely kept pace with inflation or lost ground. At the same time, workplace productivity has risen considerably, with workers across industries and income levels producing more in fewer hours of work.
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