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Clark County's Economy: Recovered and Then Some

December 8, 2022
Authors: Scott Bailey, Regional Economist
Publishers: HFO Apartment Investor Newsletter | 2022

by Scott Bailey, Regional Economist, Washington Employment Security Department

Beginning in 2021, recovery accelerated in Clark County. Employment in September 2022, for example, was 7.1% higher than before the pandemic. This was better than any other county in the state. In comparison, national employment was up 0.3%; Washington state, +1.2%; Oregon, +0.1%; the Portland metro area, +0.5%; and the Seattle metro, +0.1%. If you factor in population growth, Clark County has fully recovered in terms of total jobs, while other areas were still in a deficit.
Most, but not all, major sectors in the county were back to “normal.” The two exceptions: arts, entertainment, and recreation (which includes performing arts, museums, bowling alleys, gambling establishments, and the like) was still over 500 jobs below pre-pandemic levels, and state and local government payrolls were down by a combined 600 jobs. These sectors were also lagging at the national level. A more detailed look reveals that employment was still off by 10% in two key industries for families: nursing homes and childcare. 

A more positive note: Manufacturing has fully recovered nationally (+1.1%), as the industrial production index hit a record high in September 2022 despite ongoing supply chain issues. Manufacturing was doing even better in Clark County, with payrolls up 3.8%. And another: professional services employment has risen 9.2% nationally and an eye-popping 27.6% in Clark County. This is a high-wage industry and includes services like computer systems design, research and development, engineering, accounting, and law. 

Finally: Unlike the nation, employment in accommodations and food services (hotels and restaurants) has exceeded pre-COVID levels by a hefty 9.1%. A new hotel just opened on the Vancouver waterfront and another will be opening in the coming months. The latest available data (from the first quarter of 2022) showed restaurant sales at 6% above pre-pandemic levels and hotel/motel sales off by 10%.

Taxable sales at retail establishments soared in the first year of the pandemic for two reasons. First, stimulus programs minimized the impact on household incomes and protected many businesses as well. Second, consumers shifted purchasing from services to goods bought at local stores and increasingly online. Spending peaked in the second quarter of 2021 and then dropped slightly and showed little change in the next two quarters. This was not surprising — as COVID-19 regulations evolved, spending patterns started to revert to normal. The effects of the stimulus programs on incomes, with a few exceptions, were largely over by the beginning of 2022, also likely affecting purchasing.

Housing construction was strong and held up well during the pandemic. The past three years (2019-2021) were the fifth, third, and highest-ranking years for total housing permits issued. Through September, permits issued were at substantially lower levels, making 2022 look more like a decent but far from record-breaking year. Despite all of the new construction, the housing shortage remained in effect, and rents kept rising. The percentage of tenants who were rent-burdened (over 30% of income going to rent) rose from 46% in 2016 to 51% in 2021. Those who were severely rent-burdened (half or more of income going to rent) increased from 21% to almost 25%.

Throughout the pandemic, national data has shown that the African American, Indigenous, Latino, and Pacific Islander populations have been disproportionately affected by COVID, both medically and economically. Nationally, African American women and Latinas in particular had sharply higher job losses and slower recoveries compared to others. At the county level, with somewhat less detail available, job loss was deeper for African Americans and Indigenous workers than for White non-Latino workers, but reductions were proportionately smaller for Asian Americans, Latinos, and Pacific Islanders. The recovery was harder to assess because we don’t have the underlying population numbers, but it appears that most demographic groups had a strong employment recovery, with the exception of Native Americans. 
What’s ahead for 2023 is anybody’s guess. In part, it depends on what the Federal Reserve Bank does next in its battle against inflation (which dropped to an annualized rate of 4.9% in October as this article went to press). Whether the Fed continues to raise interest rates and how quickly it unwinds its asset purchases (qualitative tightening) will of course have a major impact on the direction of the economy.

Unfortunately, the Fed does not have the tools to combat the major source of price increases: the 40% to 60% increase in corporate profits (depending on which measure of profits you use) since the pandemic began. The number of products and services in the U.S. controlled by a handful of businesses has grown enormously over the pasts few decades, and in the past two years, corporations have certainly exercised their pricing power. There appears to be growing bipartisan interest in Washington D.C. in responding to monopolies and proposed mergers that lead to greater concentration in industries. That will be an important issue over the long term.

The most important issue for 2023, and for many years to come, will be how we respond to climate change. 

In some ways, almost everything else is just noise.

Scott Bailey can be reached by email at 
scott.bailey@ESD. or phone at (360) 810-0048.

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