Washington state jobless rate hits 6%, highest in four years

As economic thunderstorms lash Wall Street and soak most of the rest of the country, Seattle and Washington state have managed to stay fairly dry. But beware: The skies are darkening quickly.

Unemployment in Washington state took a big jump last month, more evidence that the local economy is sliding toward recession. And though inflation abated a bit, prices for food, fuel and shelter are still considerably higher than a year ago.

The statewide jobless rate hit 6 percent in August, after adjusting for seasonal variations, versus a revised 5.6 percent in July, the state Employment Security Department reported Tuesday. That was just below the national rate of 6.1 percent.

The last time the state jobless rate was this high was October 2004, when the state was coming out of its last economic downturn. Now, however, unemployment is rising rapidly: As recently as February, the jobless rate stood at just 4.5 percent.

Unemployment also rose sharply in the Seattle metro area, to 4.8 percent from 4.3 percent in July.

The department estimated that 200,930 Washingtonians were out of work, 13,040 more than in July.

Another sign of weakness came in the nonfarm payroll report, issued along with the jobless figures. The state added just 1,300 nonfarm payroll jobs last month.

August marked the fifth month out of the past six in which the payroll-jobs figure barely budged.

Still, "even though we're growing slowly, we're at least growing," said David Wallace, the state's acting chief labor economist.

But Wallace said it's likely the jobs picture will continue to deteriorate over the next several months, as the gap widens between the number of available positions and people seeking work.

Layoffs at several high-profile companies in the region — Washington Mutual, Weyerhaeuser, Alaska Air — have yet to be fully reflected in the official unemployment statistics.

"There are a lot of signs that are indicative of a recession, but I'd hesitate at calling it that," Wallace said.

The weakening state economy isn't directly connected to the turmoil on Wall Street, but both share the same root causes: the collapsed housing and mortgage markets, and the credit crisis they sparked.

The slowdown in the local economy comes after a national recovery that was too weak to allow many people to recover ground lost during the tech wreck and subsequent recession of the early 2000s.

"This was sort of the boom that wasn't for a lot of working families," said Marilyn Watkins, acting executive director of the Economic Opportunity Institute.

The Seattle labor-oriented think tank recently released a report on "The State of Working Washington 2008."

During each of the previous expansions since the end of World War II, Watkins said, inflation-adjusted (or real) family incomes rose from the peak of one cycle to the peak of the next — meaning people were getting ahead.

But in the expansion that seems to be ending, she said, the median real family income in Washington peaked at $58,080 — shy of the level set at the peak of the late 1990s boom.

"Families really aren't in a good position to be entering into this period of economic insecurity," she said.

Washington's strongest-performing employment sector last month was local government, which added a seasonally adjusted 4,400 jobs.

Software publishers added 700 jobs, and hospitals, education services and bars and restaurants added 400 jobs each.

But the transportation and warehousing sector lost 500 jobs in August. Clothiers cut their payrolls by 600 jobs and computer-systems design lost 400 jobs.

Aerospace, one of the few manufacturing industries that has been regularly adding workers, held steady at 86,000 last month.

Residential construction slid by 1,000 jobs. Over the past 12 months, the state's residential-building sector has shrunk by 8,800 jobs, or nearly 8.8 percent.

Gains in nonresidential construction weren't enough to offset those losses.

A glimmer of good news came from the federal Bureau of Labor Statistics' inflation report. Inflation in the Seattle metro area eased off a bit in August, though it remains relatively high and is running hotter than most of the rest of the nation.

According to the bureau, which tracks Seattle-area inflation every other month, local prices rose 5.45 percent between August 2007 and August 2008, versus a 12-month rate of 5.83 percent in June.

Retreating gasoline prices were largely responsible. Gas fell 7.2 percent from June, though it's still 41.9 percent higher than in August 2007.

Prices for household furnishings dropped 2.8 percent since June, apparel was down 2.2 percent, and alcoholic beverages fell 1 percent. But rent rose 1.2 percent over the past two months and medical care was up 2 percent.

Grocery prices, which are measured every month, fell 1.5 percent compared with July, though over the past 12 months they're still up 8 percent.

Drew DeSilver: 206-464-3145 or ddesilver@seattletimes.com