Eastside Economic Forecast Breakfast

On Thursday morning, the Bellevue Chamber of Commerce presented the Eastside Economic Forecast Breakfast at the Meydenbauer Center.  There were several hundred attendees from all over the Puget Sound area.  The presentation consisted of an overview of the current economic picture by Chris Falco, the Chairman of the Bellevue Chamber followed by presentation by each of the three members of the panel.  The panel members were:

• Joseph Quinlan – global economist – currently with Bank of America
• Kristina Hudson- Business Development Manager for the Interactive Media and Technology cluster at EnterpriseSeattle
• Glen Hiemstra – Futurist.com founder and owner

Overview

Chris presented a lot of information fairly quickly, so my notes are sparse.  Fortunately, most of the statistics presented can be seen in two PDF files that you can download from the Bellevue Chamber.  The two documents are:  Eastside Economic Indicators Hot Sheet and the Eastside Economic Forecast Breakfast Survey Results.

In general, the forecast for the economy on the Eastside is good – over 60% of the business leaders that were surveyed indicated that they thought their business would be hiring more employees during 2008.  The longer forecasts through 2040 show continued growth in jobs and population. 

Joseph Quinlan

He expects Q1 and Q2 of 2008 to be a bit bumpy nationally, but does not expect a recession.  He indicated that the current turmoil in the economy is the result of Greenspan’s policy of easy money – which was kept in place for far too long a time.  Joseph kept making references to now being the time we need to ‘clean up after the party’.  The housing industry provided a lot of the fuel for the party and it is now the sector that will require the most clean up activities.

Exports are strong and will continue to be so.  We currently export $140B per month – more than India exports in a year.  Joseph talked about the news media’s fascination with China and India being competitive with the USA in terms of exports and position in the world economy.  I got the impression that Joseph did not agree that this would be an issue in the near future – too many internal pressures in each of those countries.  He listed several pressures – one of which was that 40% of India’s population cannot read or write.  China also has a very low per capita income that will put pressure on the government as they accelerate their position on the world economic stage.

We currently have an unemployment rate in the range of 4% – and only 2% for college educated workers.  This is amazing low and puts a real limitation on our ability to grow our economy – you can’t just hire more people, you need to increase productivity to get any real gain in production.

Joseph talked about a set of deficits that will be our challenge for maintaining our national economy:

• Energy – we need to become less dependent on foreign sources of energy.  He mentioned that it costs approximately $4 / barrel for the Middle East countries to extract the oil from the ground, but the cost to the refiners is approaching $100 / barrel.  This margin is a wealth transfer from us to people who do not like us.  We need to be aware of the ramifications of continuing to transfer wealth this way.
• Capital – we are currently attracting investment from overseas.  Our government deficits are funded with some of this investment.  When these foreign sources are diverted to build capital improvements in their own countries, how will we fund ourselves?  We need to look at how much we are continuing to spend and cut back where possible.
• Brain – our own population does not produce enough highly educated workers to support our place in the global arena of innovation.  We bring foreign students here to educate them, but many of them return to their homelands.  We need to push our own population to higher standards in education.

Kristina Hudson

Kristina presented the results of a study on Interactive Media within the Puget Sound region.  The study was funded by the King County Economic Council to show the economic contribution of the video game market to the region.  The anchors of the video game market within King Country are Microsoft, Nintendo, and Real Networks.  Some of the results of this study are:

• 150 companies or divisions are participating in the video game market
• 15,000 jobs in these companies – which supports 50,000 – 60,000 total jobs within the region
• 33% job growth
• $77,000 average salary for these jobs
• $4.9B revenues per year

Kristina is very pleased with the study and the results that show the video game market does contribute significantly to the region’s economy.

Glen Hiemstra

Glen published a new book in 2006 – Turning the Future into Revenue.  He wanted to give us a ‘random view’ of the future by presenting a set of ideas that we can use to think about future business opportunities.

• Aging Curve – the baby boomers are aging and will start to retire in 3 years.  Boomers are defined as having been born between 1946 and 1964.  Retirement at 65 can start happening in 2011, but retiring at 62 can start next year for those early boomers.  At the current time, 1 in 10 people that you see are over 65 – by 2020, this number will change to 1 in 4.  How will this affect the economy?  How will housing choices change?  Will there be more demand for low maintenance housing?  More single level housing?
• Global Warming – if true, is there something we can do about it?  What changes will it cause that will present opportunities – he gave an example of the arctic ice cap being smaller – so can we more easily drill for oil under the sea in those locations?  He gave another example of an electric car manufacturer that he recently visited – this market will be stronger because of issues of foreign energy and global warming.
• Distribution of wealth caused by technology – in the industrial age, turning an idea into a product took many people at different levels of education / skills.  This resulted in all levels of wage to grow more uniformly.  In the current age, a fairly small set of people, often only in one category of skill / wage, can turn an idea into a product.  This results in all of the wealth / growth occurring in that one category.  The billionaires created by Microsoft, Yahoo, Google, etc. are all examples of this.  What pressures will result from this?

It was an interesting meeting – not completely what I expected from the title of the event.