An index intended to show the direction in which Spokanes economy is headed has reached its highest point possible, providing the strongest and most positive interpretation of the local economic trends since the index was created, its author says.
Called the Spokane Leading Economic Activity Index, it was developed in 2001 by Washington State University professor Don Epley and uses select data that reflect the metropolitan areas economic makeup.
The index can vary between zero and 1.0, and has averaged 0.58 since its inception, previously topping out at 0.67 a couple of times and falling as low as 0.16 back in the winter of 2002. In Epleys September report, issued last week, the index was at 1.0, the top end of the scale. It reflects data from May, June, and July.
In the three years that we have done this analysis, I have never seen a picture that looks so positive, says Epley, who teaches real estate and economics at WSUs Spokane campus. Very rarely do the indicators all point in the same direction. The work force is up, unemployment is down, residential permits took a significant jump, and the national consumer expectation indicators are among the highest levels.
Jon Eliassen, president and CEO of the Spokane Area Economic Development Council, says hes seeing the same trends, and points specifically at residential building permits, which he says some people have forecast will be extraordinarily high this year in the Spokane-Kootenai county market.
Also, he says, What I hear on the streets is that there is an increase in retail sales as well.
Rich Hadley, president and CEO of the Spokane Regional Chamber of Commerce, says, To see nine out of nine indicators up, thats better than Ichiro has done in July and August, referring to Seattle Mariners standout right fielder Ichiro Suzukis recent batting tear.
I respect the information because I think Don Epley takes a very cautious approach, Hadley says. To see him validate what were seeing around the region is certainly very encouraging.
Epleys index tracks nine economic indicators, including six specific to the local economy and three national indices.
The three national measuresthe U.S. Index of Leading Economic Indicators, the U.S. Index of Consumer Sentiment, and the U.S. Non-Manufacturing Index of Business Activityall showed upward movement during the period.
On the local front, Epley found that single- and multifamily building permits both were up sharply, both the civilian labor force and the number of non-farm employees grew, and the number of unemployed here was at its lowest level in two years.
The sixth local indicator is based on the other main index that Epley compiles, called the Spokane Economic Activity Index, which also showed positive movement in his September report.
That index was constructed to estimate real economic growth in the Spokane metropolitan area by estimating changes in the purchasing power of the work force here, using employment and wage data, Epley says. He says it estimates economic movement here in a manner comparable to the way the nations Gross Domestic Product shows the progress of the U.S. economy.
An increase in the index means the work force here has more income to spend, and vice versa, he says. Because it relies on government data, the index lags some. The September report reflects activity in the second quarter of this year.
For that quarter, the index stood at 113.76, about 2 percent higher than a year earlier and just shy of the 114.33 level it hit in the fourth quarter of 2000, the highest mark it has achieved in 20 years.
In comparison to the figures for the previous quarter, economic growth in the Spokane economy has started to recover, Epley writes in his report.
Over the 20-year period for which Epley has made calculations, Spokanes economy has grown at an annual average rate of about 2 percent, dipping significantly only during a two-year period beginning in 2001.
This is all good news for the community and the region, says the EDCs Eliassen. Its good to see economic activity. It makes people feel better about hiring and expanding. Theres just real strong growth in the numbers.
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