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More than 40% of the jobs in Washington rely on international trade.

And when it comes to Western Washington's economy, it's all about the ports of Seattle and Tacoma.

So how long will we be staring down the barrel of a trade war that has observers in this region increasingly concerned about supply chains, income and inflation?

This is our annual look at the Tacoma Pierce economy.

And this time there's a lot of concern.

That's the discussion next on northwest.

Now.

You.

Every year, the Tacoma Pierce County Chamber of Commerce releases the Pierce County Economic Index, or PCI report.

I help go through the data at the annual Horizons Breakfast with Doctor Neal Johnson, who crunches all the numbers from the previous year and then tries to read the tea leaves for the year ahead.

Seats are still available for January 29th program.

You can get involved through the Tacoma Pierce chambers website.

Up until 2022, all the trend lines were headed up for more than a decade.

But the last couple of years haven't been great, with a slight uptick in growth.

But with the loss of some tied flat jobs and several big development projects running into financing problems.

So coming up on the 29th of this month, we get the numbers for 2024 and look ahead to 2025.

For now, though, as Steve Coogan's tells us after Donald Trump was elected, most of the attention shifted to a possible or an actual trade war with China, Mexico and Canada.

Every farmer I buy from, I know their name.

For more than three decades, the Potter Farmers Market promised Pierce County corn fresh by local and build community.

This space just transforms into this vibrant community.

The market invites vendors hoping to offer something for everyone meals, fresh meat and produce, even pickles.

That might be pretty good.

Have a oh.

Starner says he's been coming to the market for so long.

He joined the board of directors.

I made this conscious decision.

I'm going to my dollars.

They're going to go as much as possible to the local growers.

Mushrooms are having a moment.

Right.

Farmer Adam DiLeo hopes that moment turns into repeat customers.

He says they're buying power, is fueling an expansion and is keeping edge of the mushroom farm.

It's a purpose built facility.

So the design, the layout, the way things flow through the farm, it's all it's all the way we want it to be.

The state Department of Agriculture says Pierce County is home to more than 1300 farms statewide.

Agriculture and food processing sectors employ more than 160,000.

Washington ranks eighth in the nation in the national trade.

Agriculture alone earned more than $12 billion in 2023.

Canada and China are America's top customers, and both could be facing a new wave of tariffs by the incoming Trump administration.

Tariffs could be leveraged in trade negotiations.

As chair of the House Ways and Means Trade Subcommittee Representative Adrian Smith.

And so we don't like it when they place the tariffs on us.

That said, we need to keep our options on the table.

But the Washington Council on International Trade says the US should resume trade policy that once fostered decades of growth and warns tariffs often include unintended consequences like inflation and layoffs paired with a global pandemic.

The council says Trump's first round of protectionist policies and tariffs fuel the significant decline for Washington's exporters.

These are taxes that will raise costs for consumers.

Congresswoman Susan DelBene introduced legislation aimed to keep the president from imposing tariffs using emergency powers, whether it's in technology or aerospace, but definitely in agriculture.

So not only does it hurt our consumers, it hurts our businesses.

I've watched this market just transform.

We call customers to farmers market, have navigated 30 years to evolving economies to start investing locally pays off no matter where international trade winds blow.

It goes beyond the success of each vendor.

We're talking about the health of that community.

In Tacoma Steve Higgins northwest now questions.

Joining us now are Andrea Ray, the president and CEO of the Tacoma Pierce County Chamber.

And Doctor Neil Johnson with sound economics.

Welcome, both of you to Northwest now.

Great to have our annual discussion about the Tacoma Pierce County economy and wrap that in with the annual event we all know is the Horizons Breakfast at the Tacoma Convention Center that the chamber puts on every year with, what is it, Andrea?

Good.

5 or 600 people, isn't it?

Talk a little bit about this year's event and what you're expecting to hear.

Yeah, absolutely.

So we are so excited to welcome back, you know, 400 to 500 of our nearest and dearest friends and business leaders, elected officials in the South sound, to learn and talk and discover what we have to look forward to in 2025 for our local economy.

You, Neal, will have an amazing PCR report available that will unveil their, that will be the super hyper local data that will allow our business owners and companies members in Tacoma and Pierce County to make the data informed decisions.

They need to have their their community and their business succeed and thrive.

So we know how important data is to strong, smart decision making.

And the more data that we're able to provide that hyperlocal data to help our businesses literally look out over the horizon to make some strong decisions, to help guide their business, into the future.

You made the point that I want to make it to the PCI is a chamber property.

You guys commissioned this study, for the benefit of members.

And I think to for the general public, because after it's released, after the event, I think there's a lot of, a good onion to peel in there, if you will.

Like you said, for some of that data, and also, in the interest of transparency, we tape this program well in advance of horizons, which means the data is still coming in for Neil.

You have the enviable or unenviable job, depending on how into economics you are.

But, you are in the process right now as we tape this, are putting this data together.

So I'll ask you kind of an overarching a, use an analogy that a non economists like me can understand.

You feel like the airplane in Tacoma Pierce is climbing, descending level flight.

How are we looking based on your early reading of the tea leaves?

Yeah.

So what I find really interesting, and I think I shared this with the audience last year, is that if you go and take, the PCI, which stands for the Pierce County Economic Index, which is essentially an income index, if you go and take that index and you chop out two years from the beginning of the pandemic, so 2020 to 2022, just squish it out, get rid of it, and then plot that it looks normal.

Okay.

It looks like we're on it.

Sort of a linear trend.

Though it looks like going forward it's flattening a little bit.

Okay.

And you can do that also with, say Pierce County employment.

Chop out those two years and it just looks absolutely normal.

If you put those two years in, it's all over the place.

Yeah.

Only we could chop out those two years.

Yeah yeah.

Yeah.

So yeah.

So so it sounds to me like we could maybe again the, you know, the non-expert here could say we're doing okay.

Yeah.

We're doing okay.

Doing okay.

Yeah, yeah.

Andrea, prior to us taping the segment you brought up, an interesting discussion.

I thought about what's going on with manufacturing.

And Neil talked about this in the data, too.

Looking for some information about manufacturing.

What what do you what have you found out?

And what is that telling us?

I appreciate that, manufacturing we know is huge for our local economy.

It's also huge for creating equitable economic development, because manufacturing jobs are some of the lowest barrier, highest earning potential jobs that we have, say to Washington a few years ago passed, a bill that is, focused on doubling the number of manufacturing jobs in Washington state.

We're not going in the right direction.

We're actually going a little bit backwards, and losing more manufacturing jobs.

Well, more than a little bit, I was interested, I believe you.

You said that you other states, we're the number one state for decline.

Correct?

That's and we know that, our, our state leaders, you know, want us to be doubling.

We want to be increasing.

And we're not we're not increasing at the rate that we would like to be increasing.

And for every, you know, job we lose, right?

You know, we have to replace that job and then, you know, and continue to add and that becomes more and more difficult when we're, you know, taking two steps forward, one, you know, like one step back, pretty continuous.

So the chamber and its deep relationship with employers and business owners, is there a legislative idea here or where do we go with that information.

What do we do with it.

Yeah, absolutely.

So the chamber is very focused on advocacy and advocacy, work on behalf of our members and trying to find, you know, what are those, practical solutions that we need to actually, you know, fix this, this challenge.

And one of those, you know, are supporting manufacturers and manufacturing businesses directly, through some proposed legislation which would, you know, basically create a, a tax credit for manufacturers who are making an investment.

Capital investments are investments, you know, in, in hiring employees.

Right?

So it's like, again, the state is saying we want to be able to double the number of manufacturing jobs, private sector.

We see you coming to the table to making the investment.

You know, here's how we're going to help support you in making that investment.

Research and development is also a key piece, right?

We want to be able to help grow innovation, within get some capital.

Get some capital.

So thinking about R&D tax credits, you know, again, again, those are two kind of areas that we're focused on.

It's going to be tough.

This legislative session.

Yeah.

There's a budget deficit and a budget crunch.

Our focus is very much and we can make a small investment that will yield greater economic side, that produces revenue and that produces revenue.

And we can start to really carve away that structural deficit, with creating more economic opportunity, you know, within the state of Washington.

And it really benefits, you know, Tacoma and Pierce County because of our strong, manufacturing base that's here.

Neil, what's your take on that on the results of that report?

I know again that you're going through the data looking for answers to see if it's buried in that data.

Do you have any theories or any ideas about this manufacturing piece?

Not not yet.

I mean, I'm still trying to figure out.

Yeah, you know what's going on?

I mean, I see it in, certainly in the employment numbers.

I also see it over on the retail sales.

They break those out by or taxable retail retail sales.

They break those out by sector and manufacturing.

Those sales were down.

So, of course the easy answer everybody will come up with is Boeing.

They had the strikes and I think yeah I'm not sure that that okay.

Yeah.

Yeah yeah.

That's where that, that's where the deep dive into the data, comes into play.

Another thing I wanted to talk about that's newsy as we approach the inauguration and, the Trump administration talk a little bit about tariffs.

Neil, I'll start with you on this one.

If I'm in your economics 101 class, what would you tell me about what a tariff is and what impact does it have on something like PCI and in terms of what that curve is doing, is it going to keep going up?

Is it going to crash it.

What do you think?

Okay.

So a tariff is essentially a tax on imports.

And I know when when people look into this they say, well, that taxes or that tariff is paid by the import.

And so therefore it falls on the consumer just gets passed along and it's like it doesn't really matter.

Doesn't matter whether you put the tariff on the importer or the exporter.

Who bears the burden of the tax is going to depend upon sort of the ability of, of the, consumer to find, you know, a different good to purchase that perhaps is domestic, as well as the exporter, or the manner of the, the manufacturer.

Do they have other places to sell their goods and stuff?

Right.

Now, if you go and look at there's been a bunch of analyzes done of, Trump's initial tariffs as well as, the ones the Biden has increased, and the consensus seems to be that that's borne by the US consumers.

Yeah.

And so if you look at GDP, that's going to have a negative impact on our gross domestic product.

About maybe half a percentage point.

And then that also translates into a reduction in income.

I keep hearing too.

It's inflationary because you're paying more.

No, it's deflationary because people will stop buying it.

I can I guess you can argue both sides of that coin, though.

I would say it would tend to tend to be inflationary.

Okay.

Yeah.

So it's going to push up prices of, of imports.

It will make it will make other imports cheaper.

So if we put a tariff on China imports from China or Canada or Mexico, the tendency is it makes the dollar stronger.

And so that's going to reduce the sort of the post currency conversion price for other goods.

But the overall effect would still be negative on the consumer.

Yeah.

Andrea, what are you you talk to business owners all the time.

You, you know, just a little plug.

The chamber has lots of evening events where you can talk to people from the chamber and all kinds of business owners and people in the business community here in Tacoma.

Pierce.

Is anybody talking about this?

Are they worried about it all?

We are, you know, the we're in the Port of Tacoma and it's import export is is our big thing here.

Is there any concern about it and what can the chamber do or what are you trying to do to be proactive, to talk to business owners about?

Hey, maybe here are a few things to think about.

Yeah.

No.

Absolutely.

So we provide over 2000 hours of technical assistance, you know, free, confidential technical assistance to local businesses all the time.

And so, I appreciate you bringing up that.

We have organized events, you know, like horizons, which is a great opportunity to connect, you know, directly with the chamber and, and other members.

But we also provide that free one on one, you know, confidential technical assistance, directly to, to members.

Because, again, I think, as businesses are, you know, as you said, kind of looking into the tea leaves, and trying to, you know, make those determinations for, you know, how do they create more predictable, predictable and stability, in an environment where there's often very little predictability and stability.

And Washington State is a trade driven state.

And our local economy, as you mentioned, with the Port of Tacoma, is, you know, hugely influenced, you know, by by swings, you know, both on both sides.

And so for us, it continues to be the conversation about, you know, what can you control and how can you control it.

Right.

So it's securing supply chains.

Continuing to have this conversation, I was going to say, do you build inventory?

Is that one of the things you do.

And it's a lot of building inventory.

And so we have you know, I'll give you an example from one of the members that we talked to, you know, most recently, you know, they've had to make some tough decisions that are, you know, look, we can't, you know, do Christmas bonuses this year for our, you know, employees, because we had to increase stock, because we don't know if we're going to be able to, you know, get the stock that we need, you know, going into the future, to be able to then, you know, sell the products.

So we're taking the capital that we have that we were going to invest here, and we're investing it there so that we can, you know, maintain operations going into the future.

When we are we don't have a lot of predictability and a lot of, you know, certainty, you know, going forward into the future.

So depending on the business, right, you know, it might look, you know, very different, depending on, you know, how dependent they are, you know, on that import export, market, but 100% Washington state.

And, you know, the South sound is no different.

You know, we are very trade driven.

It is a global economy.

Yeah.

And so what happens globally, what happens with trade and tariffs.

It does impact that small business.

It does impact, you know, the the corner store.

I think oftentimes, you know, more than people might realize.

And I think that's such a good story told to because I mean it's actually impacting behavior already.

Absolutely.

Yeah.

Neil.

What we talked a little bit about inventory building.

I don't want to get too academic.

But you know what?

What can the average person, I guess, who's watching this and says, well, gee, what if we do get into a trade war?

What should I start buying?

Stocking white paper towels?

I mean, what's what's the take here?

What is it?

When you're looking at income and you're looking at economic success, is there anything proactive else that can be done?

Well, aside from, you know, building household inventory, which I don't think is practical for houses, I mean, what I see in the data is people making substitutions away from, gone up and, you know, not not necessarily a way away from what's higher in prices, but making adjustments to their budgets.

Yeah.

I mean, I see that in the taxable retail sales data.

I mean, it's just it looks terrible from, from 2023 to 2024.

Really?

Well, I mean, auto sales are down.

I mean, it's, and with construction and sort of flat, construction sales are flat.

But it doesn't look too good.

Other than if you are, say, purchasing stuff at a grocery store, know where you know where prices are higher, but it's sort of a necessity.

So to some extent, they're substituting, or adjusting their budget, by reducing expenditures in one place so that they can afford the stuff that they must have.

If I could add, I think that that's a really important point, because just as every individual household is having to make, you know, tough decisions on discretionary spending at the grocery store, businesses are also having to make those tough decisions, you know, on discretionary spending, right?

So where are, you know, the investments, you know, where, you know, are they putting capital?

How are they putting capital back into the business?

And where we're seeing that happen, it's it's absolutely no different for the, you know, for that for the household going to the grocery store, or the business, you know, owner trying to, you know, plot together that, that course for, you know, how are they going to, you know, make their budget?

How are they going to be able to, you know, increase wages, you know, continue to offer health insurance for their employees, you know, maintain, what they need to maintain to attract and retain their workers and customers and retain.

Yeah.

So they're talking to you about that.

Absolutely.

Yeah, absolutely.

Yeah.

That's a big one.

I don't want to go, spend too much time on this.

But just briefly last year there was a we all had to raise our hands about how many interest rates we expected.

Yes.

I didn't raise my hand because I was telling you zero was was wrong, weren't you?

I was, but I actually think from a policy perspective I was right, Neal, because it we cannot kill this last bit of inflation here.

What do you think is going to happen?

Do you think we're going to hire for longer or are we going to go down?

What do you think?

Well, yeah.

So I mean they've had as of this taping, they've had two reductions.

Now.

The first reduction was a half point reduction.

So that almost counts as to let's say that to some extent.

So and then and then they're meeting as we're following that.

You're taping this today and tomorrow, to decide whether there's a third one.

And I'm probably of a different mind than you, on this.

And I know that if you look at, like wall Wall Street economists, they're going to say in terms of consumption spending that, consumption spending is fine going it should be fine going forward.

And I'm not so sure about that.

And I think it's tied back into interest rates, which feed into mortgage rates.

And so mortgage rates are high.

So that has a negative impact on housing affordability here.

Yeah.

And it has some interesting effects on people's willingness to say so one house and buy another house.

So you have a lot of people to say baby baby boomers.

That's like, maybe I'd like to move or something, but but they've got a mortgage taken out at a low interest rate.

Sure.

They're frozen.

They're frozen in there.

Yeah.

Okay.

And the ability of households to tap into wealth.

So if you look at, say, debt to wealth ratios where we look okay, but to tap into that wealth, a lot of that wealth is in home equity.

Yeah.

And stuff.

And so you have high mortgage rates that sort of dissuade that.

So I hear you arguing for a cut I'm arguing.

Well I know I'm taking bets now.

Oh no I'm agnostic as to as to whether we should or shouldn't have a cut.

Yeah.

I mean, there's something to be said to for for not having households pile on additional debt.

Well, and so to the extent that we lower interest rates and allows them to do that or encourages them to do that, you know, you get that energy.

I thought you had some great insights about what the discussion is around tariffs.

Are there similar discussions about interest rates?

Is it is it something that's being talked about out there?

I think that again, you mentioned that a little bit that, you know, we we do need to, you know, be thinking about and I, I would anticipate, you know, another interest rate cut.

And that I think well, you know, hopefully, you know, encourage a little bit more, you know, capital a little bit more, you know, investment.

As businesses, you know, have been, you know, holding on to cash.

I think what's tricky in this, you know, economic landscape that is so complicated with, again, so many, you know, global pressures and other uncertainty is ordinarily maybe.

Yes.

Right.

That would encourage, you know, more of that, you know, capital investment.

But we'll businesses continue to hold on to some of that capital just to protect against some of that other uncertainty.

I want to make sure we give you time here at the end to talk a little bit about some chamber milestones.

140 years.

True.

Coming up here, Kiva loans a million bucks into diverse entrepreneurial ship.

The business leadership Academy environmental excellence awards.

You guys have been busy.

Talk a little bit about that, what the chamber has been up to and what some of those milestones mean.

Yeah, I appreciate that.

We have been serving the South Sound for 140 years, and what that service looks like is different today than it was 140 years ago.

But we remain ever committed to supporting our local business community because we know how critical it is to creating, as we've been talking about, that equitable economic development, prosperity for all.

And so when we're looking at investing in leaders, investing in future leaders, that's a huge part of that work with the Business Leadership Academy, training and encouraging, you know, people to get the skills to take that next step in their career.

We also launched Candidates Academy.

Right, because we know also how important it is to have elected officials, who understand and share our core values.

The environmental Excellence Awards again, for us in the South sound, they're manufacturing, you know, and being a responsible, you know, steward of of the environment, maintaining our amazing high quality of life is as integral, to how we're going about, economic development.

I think maybe 140 years ago, economic development was a little bit more smokestack chasing.

You know, that's not what economic development is today.

It is about maintaining that high quality of life that we enjoy.

In the South sound, it's education, it's workforce development, it's recreation.

It's a big part of the creative economy, which, you know, we focus on with our Space Works program in partnership with the City of Tacoma, supporting creative entrepreneurs.

And it's supporting small, micro, diverse, veteran owned businesses, as we said, you know, with, the Kiva program, we know so often small and micro-businesses can't grow their business because they don't have that extra $5000 or $8000.

And so our average loan amount for over that million dollars that we've invested into our local community is $8,000.

Yeah.

And it can make it's a break and it can make or break a business.

In terms of their ability to grow last 30s shameless plug.

How do people get involved with the chamber or with horizons?

Yeah, absolutely.

So please visit our website Tacoma chamber.org.

All of the information is there on the event.

January 29th.

It's a breakfast event at the Tacoma Convention Center.

Great information will be shared.

No more tea leaves, right?

You know, January 29th will actually have some real data and information that people will be able to use to inform their decision making as they look into 2025, and beyond.

And so much great speakers.

Great.

And I had some great panel discussions.

Absolutely.

So being able to dive a little bit more into some of those discussions, we'll be talking more with you, then at you this year.

Great conversation.

Thanks both for coming to northwest now.

Thank you.

Thank you.

Had it most of 2024 was spent sweating out whether we'd be able to engineer a soft landing from the loss of Covid era stimulus and the soft landing actually happened, a very rare feat when it comes to running a large economy.

But as we sit here today before Inauguration Day, all bets are off.

The bottom line A real trade war will hurt this region more than almost any other in the United States.

And you can make your own determination about whether a red Washington, D.C. will care too much about our suffering here at ultra blue Washington.

If this turns into a long siege, I hope this program got you thinking and talking.

You can find this program on the web at kbtc-dot-org, stream it through the PBS app, or listen on Spotify and Apple Podcasts.

That's going to do it for this edition of Northwest Now.

Until next time, I'm Tom Layson.

Thanks for watching.

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