Overall, 2016 is ending on a positive note when you consider the economy at a local and national level. Based on a review of current events as we transition to the last month of the year, looking at the markets and recent data reports, it doesn’t appear we will slow down – at least not in the near future. The financial forecast for the United States shows modest signs of growth, and the Clark County region, as well as Oregon and Washington, look like they will mirror what’s happening nationally.
At the Clark County level, employment numbers started off strong in 2016 at 9 percent above the pre-recession peak (compared to only 3 percent increase at the national level), according to the Employment Security Department for Washington. The numbers stayed strong. Nonfarm employment on a seasonally-adjusted basis in Washington state rose by 10,600 from September to October.
Plus, the county has seen significant growth in business development with several companies moving into the Vancouver region. Additionally, a number of startup companies have put down roots in the area. However, with all this job growth, the demand for housing has also grown, and we are experiencing an availability shortage. Area home prices are increasing faster than the national average due to the higher demand, according to a June 10 Vancouver Business Journal article. This could cause a slowdown in the overall economy in 2017 if left unresolved.
At the national level, we’re looking ahead to what might occur after the personnel change happens in Washington government. President-elect Donald Trump and his economic views have had an effect on the stock and bond markets, and we expect more volatility will happen in 2017. We plan to keep a watch on the following issues:
Corporate and individual tax cuts – The possibility of cuts has been discussed by the new administration, and if they are enacted, may help stimulate the economy. Repatriation of corporate profits from overseas and a big infrastructure stimulus package have also been mentioned as possibilities, which may help the business sector and provide the groundwork for rising stock prices. We expect with these discussed changes that debt levels will increase, which may lead to some market volatility.
With a majority Republican Congress, there is a possibility that proposed policy changes by the president may move smoothly through the approval process. The last time we saw a Republican president and both houses controlled by the same party was during the George W. Bush administration from 2003 to 2007. Any changes in policies or legislation will influence the economy, but how will depend on the proposed change.
At the international level, questions remain on how the newly-elected president and Congress will handle protectionism policies and geopolitical concerns. We anticipate that any protectionist policies proposed by the new government may promote global growth and free trade. A question that remains is how the president-elect will be tested by the international community, and the resulting actions he may take.
Looking ahead to 2017 at the local level, we expect the Clark County economy to be boosted due to the approval by voters on November 8 of two bills. The first was the Vancouver Proposition 1 Very Low Income Housing Levy, which asked voters to approve providing long-term housing solutions for vulnerable residents of the city, including seniors, veterans and working families struggling to pay rent. We anticipate this will help with the housing crisis mentioned earlier, and also provide construction jobs.
The second bill approved was a minimum wage hike in Washington. This hike from $9.53 to $13.50 will be phased in over a period of time through 2020, so we won’t experience all the economic benefits immediately. What we expect to see are consumers with more spendable income on hand helping to boost the local economy when spending it locally in stores and restaurants.
Clark County residents will experience changes due to the Nov. 8 election results, and it’s safe to say that many of those changes are very likely to influence both the national and local economies. Because of this anticipated change, we’re expecting 2017 to experience some market volatility, but at the same time, continue the same modest growth pattern of 2016.
Cindy Luckman is senior vice president for The Private Client Reserve of U.S. Bank in Vancouver. You can follow her on LinkedIn at https://www.linkedin.com/in/cindyluckman.
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