2013 FORECAST: A LOOK AHEADPuget Sound Economic Forecast

Dick ConwayEconomist & Co-Publisher

Puget Sound Economic Forecaster

THE PUGET SOUND

ECONOMIC FORECASTER

PUGET SOUND ECONOMIC OUTLOOK

Dick Conway

The Puget Sound Economic Forecaster

Conway Pedersen Economics, Inc.

www.economicforecaster.com

THE PUGET SOUND

ECONOMIC FORECASTER

U.S. Real Gross Domestic Product

2000 2002 2004 2006 2008 20100.600

0.700

0.800

0.900

1.000

1.100

1.200

1.300

2000-2011 1929-1940

Initial Year =1.000

1929 1931 1933 1935 1937 1939

THE PUGET SOUND

ECONOMIC FORECASTER

Puget UnitedSound States

Dot-Com/911 Recession

Employment (% change) -4.8 -2.0

Peak unemployment rate (%) 7.0 6.2

The Great Recession

Employment (% change) -7.6 -6.2

Peak unemployment rate (%) 9.7 10.0

Dot-Com/911 Recessionand The Great Recession

THE PUGET SOUND

ECONOMIC FORECASTER

Reasons for DeeperPuget Sound Recessions

• Dot-Com/911 Recession

High concentration of dot-coms

The Boeing Company

• The Great Recession

Rapid expansion prior to recession

Very strong housing market

Washington Mutual Bank

THE PUGET SOUND

ECONOMIC FORECASTER

Puget UnitedSound States

Employment 0.2 -0.0

Unemployment rate (avg. %) 6.2 6.2

Personal income (cur. $) 3.9 3.8

Population 1.2 0.9

Economic Growth, 2000-2011Annual Percent Change

THE PUGET SOUND

ECONOMIC FORECASTER

2011 2012 2013 2014

Employment 1.7 2.7 2.7 2.4

Personal income (cur. $) 5.4 4.6 5.1 5.7

Consumer price index 2.6 2.7 2.4 2.4

Housing permits 11.9 50.2 22.1 10.0

Population 1.0 1.3 1.4 1.4

Puget Sound Economic ForecastPercent Change

THE PUGET SOUND

ECONOMIC FORECASTER

2011 2012 2013 2014

Retail sales 5.5 6.2 5.3 5.5

Taxable retail sales 2.5 5.3 5.1 5.9

Home sales 8.9 15.4 19.3 -0.5

Average home price -9.6 2.4 8.3 4.4

Apartment vacancy (%) 4.9 4.7 5.1 5.2

Puget Sound Economic Forecast (2)Percent Change

THE PUGET SOUND

ECONOMIC FORECASTER

Puget Sound Leading Index and Employment

Series1

0.920

0.960

1.000

1.040

1.080

1.120

1.160

1.200

1600

1650

1700

1750

1800

1850

1900

1950

Leading index (l) Employment (r)

1987=1.000 Thousands

Note: Shaded areas designate recessions.

1999 2001 2003 2005 2007 2009

1987=1.000 Thousands

Note: Shaded areas designate recessions.

2001 2003 2005 2007 2011

THE PUGET SOUND

ECONOMIC FORECASTER

1970-11 2011-21

Puget Sound

Employment 2.4 1.9

Personal income (cur. $) 7.8 5.2

Population 1.6 1.1

United States

Employment 1.5 1.4

Personal income (cur. $) 6.9 4.8

Population 1.0 0.8

Economic Forecast, 2011-2021Annual Percent Change

THE PUGET SOUND

ECONOMIC FORECASTER

Reasons for Faster Growthin Puget Sound Region

• Geographic location

• International trade

• World-class companies

• High technology

• Well-educated workforce

• Natural and cultural amenities