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Originally published Saturday, April 6, 2013 at 8:00 PM

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Cascadia's bumpy recovery

Special to The Seattle Times

Cascadia's economic orbit

Click the graphic to learn more about key indicators for the states of the Northwest and British Columbia. Or view the graphic as a PDF.

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When I arrived in Seattle in 2007, before the reality of the housing crash had rattled through the supply chain, I would watch trainloads of British Columbia lumber headed south. Once or twice in the same view, I could see a barge of goods in Elliott Bay en route to Alaska.

These images were powerful introductions to the interconnectedness of the Pacific Northwest economy.

At a recent luncheon on the maritime industry, the point was reinforced by Tom Sunderland, of Ocean Beauty Seafoods, a Seattle-based company that depends on the fisheries of the Bering Sea but processes the catch on land, including in Washington, Oregon and Idaho.

“Seattle is the southernmost port of Alaska,” he said.

The Northwest is not monolithic, of course. It consists of economic relationships among states and provinces but also high-stakes competition.

For example, Vancouver, B.C., and especially Prince Rupert are big rivals for container traffic to the Puget Sound ports.

The region is impressive in its diversity, from airplanes to mining startups, software and rare-earth minerals. Alaska has oil, as well as the single most valuable salmon fishery in the world. Wheat, wine, apples, potatoes — we sell them to the world.

Our region contains some of North America’s most desirable cities and also many of its most spectacular natural wonders. It also shares certain interests, such as trade with Asia, tourism, agriculture and the sustainability of natural resources. Several metropolitan areas are technology powers.

Definitions can be tricky, too. For example, the public-private planning group Pacific NorthWest Economic Region spreads a wide net, drawing in Alaska, Idaho, Montana, Oregon and Washington, as well as Alberta, British Columbia, Saskatchewan, Yukon and the Northwest Territories.

Here, I’m narrowing the lens to Alaska, British Columbia, Idaho and Oregon.

Put together their total output, at around $814 billion in 2011, and this Cascadia would be the 18th largest economy in the world.

But aside from the well-known boom in Seattle, as well as strength in Vancouver, B.C., the Northwest is feeling its way to recovery.

Steve Gordon, of Gordon Trucking, whose rigs haul freight throughout the Northwest, said the situation is “still a bit choppy, but we’re certainly seeing some hopeful signs.”

The housing recovery is real if uneven geographically. Gordon sees it in strong demand at the home-improvement chains and some of the primary suppliers to the house-building industry, such as insulation, wood products and cabinets. Retail in general is doing better.

He mentioned a distributor looking to build a new facility, either in the Puget Sound area or Oregon. Here, regional competition kicks in. If the unnamed company doesn’t like the congestion or rules here, they move elsewhere in the Northwest.

“We've seen this occur several times over the last decade or so with companies needing a larger distribution footprint to bring products to market,” he said. “Ironically, all we do is increase the miles to market for these companies who are largely selling into the more densely populated Seattle/Tacoma metro markets.”

Digging deeper into recent regional changes:

• Despite its high unemployment, Oregon turned in the best growth in state gross domestic product in the region, increasing 14 percent from 2007 to 2011. Alaska was strong, too, with output rising nearly 10 percent during the same period.

By contrast, Idaho’s output was nearly flat in 2007 vs. 2011. All states saw a dip in the trough of the recession. In Washington, real gross domestic product in 2011 showed only a 1.7 percent increase from pre-recession 2007, but it was up 3.8 percent from the trough of 2009.

• Washington exports skyrocketed nearly 45 percent from 2007 through 2012, far outpacing any other Northwest state.

• Performance in median household income illuminates some of the recession’s damage. Using the Census Bureau’s three-year moving averages, every state in the Northwest showed lower income in the 2009-2011 window compared with similar periods back to the mid-2000s. Washington and Alaska outperformed the national average, while Oregon was slightly ahead and Idaho below.

A few generalizations are possible: Cities are doing the best; companies that went into the recession with strong balance sheets survived nicely; agriculture is strong, and slow growth is the uniform forecast, barring some outside shock. The effects of the federal sequester cutbacks have yet to be measured.

Outside of metro Seattle and Vancouver, B.C., high unemployment continues to be a problem, especially in Oregon.

Oregon saw some of the worst unemployment in the nation during the recession, with more than 12 percent officially jobless. In February, the rate was 8.4 percent, well above many other states. The rate for metro Portland in January, the most recent data available, was 8.5 percent.

Various explanations are offered, including the decline of timber and wood products, the cycles of durable-goods manufacturing including semiconductors, a lack of many large metropolitan areas and a quality of life so high that people stay and hope for work.

It’s not a new phenomenon. Oregon suffered the highest unemployment rate in the country for a time during the 2001-2003 recession.

Still, this sits in juxtaposition to the dynamism of Portland’s startup scene, its international acclaim as a livable, loveably weird city, and the prosperity of its major employers.

Idaho is clawing back, too. A Zions Bank forecast from last winter noted, “The Gem State economy was hit extremely hard during recent years, with substantial weakness in various employment sectors. Losses in construction employment have been particularly painful, with current employment near that of the mid-1990s.”

Still, this is the strongest, most economically diverse region I’ve ever lived in, and my travels have included the Southwest, Southeast and Midwest. California has unique strengths but massive challenges.

Cascadia may do even better in the long run if the effects of climate change are felt more profoundly elsewhere. And that raises another regional challenge: What to do about a potential flood of climate refugees that could destroy many of the things that make the Northwest so attractive.

My advice: Tell people it rains all the time; they’d hate it here.

Jon Talton is a journalist and author living in Seattle. For more than 20 years he has covered business and finance, specializing in urban economies, energy, real estate, and economics and public policy. You may reach Jon Talton at jtalton@seattletimes.com

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