Comedian Gilda Radner’s character Roseanne Roseannadanna used to say in the face of problems “it’s always something.” Certainly, this year, something always seemed to be roiling the economic waters, which are unlikely to calm in 2023.

For four decades, I have built my annual regional economic forecast around the answers to three questions.

First, did we grow jobs, wages, and GDP in our region’s key Metropolitan Statistical Areas (Spokane-Spokane Valley, Coeur d’Alene and Lewiston-Clarkston)?

Second, how did growth in these MSA’s compare to growth in the state, the nation, and the nation’s hundreds of other MSAs?

And third, are there any foreseeable regional events or factors that might cause significant variations in the way national economic activity plays out here as opposed to the nation as a whole?

I use my answers to these questions to inform my outlook for regional GDP, employment, income, and retail spending in the coming year. 

The stats for 2022 so far look quite good for much of the Inland Northwest. Moreover, some recently released regional GDP numbers for 2020 show that the region weathered the first year of the pandemic well compared to the nation as a whole. Here’s what we know, based on my analysis of Bureau of Labor Statistics data compiled by the Seidman Research Institute at Arizona State University. 

Looking at the first eight months of this year, the Spokane-Spokane Valley MSA has employed 11,709 more workers than during the same period in 2021, a gain of 4.7%, while the Coeur d’Alene MSA added 2,200 jobs (3.1%), and the region’s third MSA, Lewiston-Clarkston, added 450 jobs (1.6%). 

Among 361 U.S. metro markets with fewer than a million workers, Spokane ranked 40th, Coeur d’Alene 162nd, and Lewiston 309th. This regional performance compares to an all-US job gain of 4.3% and statewide gains of 4.8% and 3.2% in Washington and Idaho, respectively. The Spokane-Spokane Valley MSA continues to deal with the rare problem of having too few workers, rather than too few jobs. In short, as we approach the third anniversary of Covid-19’s arrival in the U.S., and despite the damage and disruption it has caused, our region’s largest economic center, the Spokane-Spokane Valley MSA (which includes Stevens County), is seeing record and near-record high employment levels and labor-force numbers. Meanwhile, the unemployment rate has dropped to its lowest level in decades—below 4%, the traditional benchmark for declaring a full-employment economy.

One reason for the current strength may lie, in part, in regional GDP figures. At last we have them for 2020—the so-called “Year the World Shut Down.” Our region was not immune to Covid’s negative productivity impacts, but we fared significantly better than the nation. Based on real-dollar changes that occurred between 2019 and 2020, here are the numbers, as reported by the Bureau of Economic Analysis, U.S. Department of Commerce: U.S. GDP declined by 3.4%, but GDP in the Spokane MSA declined by about 2.1%, the Coeur d’Alene MSA by about 1.6%, and the Lewiston-Clarkston MSA by only 0.1%. 

Looking at possible regional economic anomalies that may alter how national economic forces play out here, the re-opening of cross-border traffic with Canada bodes well for tourism and retail throughout the region. Enhanced entertainment venues and offerings are also positives for visitor spending. 

For 2023, I think we can expect:

• Continuing high (and higher) prices at the gas pump. (It requires an Einstein to sort through the economics, politics, and diplomacy of oil, but few factors in 2023 are likely to favor consumers. The higher costs of energy are among factors that will put a drag on discretionary consumer spending. 

• Persistent CPI-measured inflation will slow by mid-year, settling into the 5% to 6% range, as the Fed steadily moves the benchmark rate to 5%. 

• Stagnating and declining GDP growth and a (hopefully) brief recession will push the local unemployment rate to an annualized 6.5% to 7.5%, with employment leveling off and the workforce population rising a bit. Wage growth will moderate.

• Rising interest rates on credit-card balances and variable-rate mortgages will require consumers to further reduce spending to meet increasing costs of household debt service. (Credit-card balances are already growing and that growth will likely accelerate during the 2022 holiday season and will continue throughout 2023). 

• With mortgage rates recently hitting 7 percent, interest rates continuing to rise, and wage increases moderating, a slowing in home sales and price-growth are obvious in their predictability.

For the all the negative “always somethings,” however, there are usually “some things” we can do, individually and collectively, to deal with them effectively and move forward. 

Shaun O’L. Higgins is managing principal of The Oxalis Group LLC, a Spokane consulting firm, a past chair of the Spokane Area Economic Development Council (a predecessor to GSI). He can be reached at [email protected].