South Puget Sound Forecasts2010-2040
October 2010
www.trpc.org
South Puget Sound ForecastsWhere are we today? Where are we going?
• How forecasting is done• Our changing economic base• Pattern of Growth• Long-Term Forecast
How Forecasting is Done• Population growth/decline
comes from– Births– Deaths– In-migration– Out-migration
• Birth rates and death rates change slowly
• Migration is highly variable
Our Changing Economic Base• If Thurston County
were a nation, its GDP (in 2007) would be $8.3Billion
• It would be about the same as Mozambique
• Thurston’s GDP would be about twice the GDP of Guinea
• And we’re gaining on Cambodia
Our Changing Economic Base• State govt
employment growth slowed after Initiative 601
• A recession also slowed the state economy
• Annual growth:1982-92: 4.8% 1992-2007: 1.1%
• State govt jobs lag WA trends by one year
State Govt
WA Empl
Our Changing Economic Base• State government
employment also drops during recessions
• It will grow very slowly when the state-wide economy recovers
• It will continue to lag state-wide trends
State Govt
WA Empl
Our Changing Economic Base• Government has the
most jobs, but its share is falling …faster private sector growth brings diversification
• Government share: 40% in 1970 28% in 2007
• Our model projects more diversification:government share down to 27% by 2030.
Our Changing Economic Base• Thurston County
is increasingly integrating into the Puget Sound economy
• Over ONEMILLION people live within 30 miles of Olympia
• Likewise, there are over ½ MILLION jobs within 30 miles
Our Changing Economic Base• Thurston
County is NOT YET a “bedroom community”
• But outbound commuting is growing…
• And will grow a lot more 0%
10%20%30%40%50%60%70%80%90%
100%
1960 1970 1980 1990 2000 2010 2020 2030
Perc
ent o
f Wor
kers
Thurston Outbound Civilian Commuters
Our Changing Economic Base• Workers
commute both into and out of Thurston County
• Many more commute out than in
• Outbound commuting is growing faster than inbound
OutboundInbound
Net Out
Our Changing Economic Base• Outbound
commuters bring home their paychecks
• Inbound commuters take them out
• The net inflow is over a BILLIONdollars
• Those paychecks bring spin-offs to the local economy
Inflow
Our Changing Economic Base• Think of
outbound commuters like an industry
• They bring more earnings into the local economy than State Government
$0
$500
$1,000
$1,500
$2,000
$2,500
1985 1990 1995 2000 2005
Mill
ions
Value of Paychecks(in 2007 $)
State Govt Paychecks
InboundPaychecks
Our Changing Economic Base• Most outbound
commuters go to Pierce County (2006-08 est. 19,000)
• King County is next (est. 5,100)
• Lewis is third (est. 2,800)
Destination of Outbound Commuters - 2000
Our Changing Economic Base• Inbound commuters
come from many surrounding counties
• The largest share come from Pierce (2006-08 est. 6,700)
• Commuters from Pierce and King combined (est. 8,700) ≈Commuters from Mason, Grays Harbor, and Lewis combined (est. 8,900)
Origin of Inbound Commuters - 2000
Our Changing Population• We grow all the
time, but sometimes fast and sometimes slow
• Growth spurts come and go
0
50
100
150
200
250
300
1970 1975 1980 1985 1990 1995 2000 2005 2010
Thou
sand
s
Thurston Population1970-2010
Our Changing Population• We grow all the
time, but sometimes fast and sometimes slow
• Growth spurts come and go
150,000
175,000
200,000
225,000
250,000
275,000
1990 92 94 96 98 2000 02 04 06 08 10
Detail: 1990-2010
Pattern of Growth• In 2006, the
recent growth spurt was under way.
• Historic patterns suggested it could last a few years.
• Once pent-up demand was met, the growth rate would taper off slowly.
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
1970 1975 1980 1985 1990 1995 2000 2005 2010 2015
Annual Population GrowthThree-year Rolling Averages, 1970-2005
Pattern of Growth
• The growth spurt reached its peak in 2006
• Monthly home sales are still very low, but may have bottomed
Pattern of Growth
• Recovery will be slow
Pattern of Growth
• For the first time since the early ‘80s, Thurston employment is dropping
• OFC projects state-wide employment to bottom out this fall
Pattern of Growth
• Our growth comes from in-migration
01,0002,0003,0004,0005,0006,0007,0008,0009,00010,000
0%10%20%30%40%50%60%70%80%90%
100%
1970 1975 1980 1985 1990 1995 2000 2005
Growth vs Migration Share
Migr % Pop Growth
Pattern of Growth
• NOW, what are the prospects for the immediate future?
• A sharp drop in rate of growth, like in the early ‘80s
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
1970 1975 1980 1985 1990 1995 2000 2005 2010 2015
Annual Population GrowthThree-year Rolling Averages, 1970-2005
Pattern of Growth
• NOW, what are the prospects for the immediate future?
• A sharp drop in rate of growth, like in the early ‘80s
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
1970 1975 1980 1985 1990 1995 2000 2005 2010 2015
Annual Population GrowthThree-year Rolling Averages, 1970-2005
What is the Long-Term Forecast?• The February
2010 forecast reflects the impact of the Great Recession
• It is lower than the last forecast for most of the time horizon
• It is still within the OFM range
• It extends to 20400
50,000
100,000
150,000
200,000
250,000
300,000
350,000
400,000
450,000
1990
1995
2000
2005
2010
2015
2020
2025
2030
2035
2040
Comparison of ForecastsOFM 2007 vs TRPC 2004 and 2010
OFMRange20042010Actual
What is the Long-Term Forecast?
• PSRC forecasts moderate long-term growth for Pierce
• TRPC forecasts a return of rapid long-term growth for Thurston
• OFM forecasts a return of rapid long-term growth for Mason
How Reliable Are the Forecasts?“Backcasting” is used to Predict the Past
How Reliable Are the Forecasts?
• The 1985 and 1989 forecastsaccurately predicted our current population
• But we took a different route to get here
How Reliable Are the Forecasts?
• The forecasts in– 1992– 1996– and 1999did not foresee the 2001 recession
• But we are precisely at the 1992 forecast
• And growth is likely to be close to the forecasts over time
How Reliable Are the Forecasts?
• Every new forecast is like a course correction
• Long-range models cannot predict the timing of recessions or recoveries
• But they are reliable in predicting major trends
• And they can examine “what-if” scenarios
What happens if growth differs from the forecast?
• Each agency updates their county-level forecast every 3-5 years.
• We monitor growth trends annually.
• Growth spurts and recessions are built into the models.
• We allow for periods of high growth, and periods of low growth - and try to forecast the average over five year intervals.
Major Points to Remember• Growth is Cyclical – “This too shall pass.”• Population growth mainly comes from job
growth – either locally, or in nearby counties• The economic role of commuters is huge• Long range forecasting is reliable for
planning purposes
What the Future May Hold
South Puget Sound Forecasts2010-2040