Business

Economists cautiously optimistic about Kitsap comeback

Kitsap Economic Alliance Director Bill Stewart says Port Orchard has weathered the economic storm fairly well, all things considered.  - Chris Chancellor/Staff Photo
Kitsap Economic Alliance Director Bill Stewart says Port Orchard has weathered the economic storm fairly well, all things considered.
— image credit: Chris Chancellor/Staff Photo

Projecting the intricacies of the economy months in advance can be as challenging as doing the same for the weather.

But as New Year’s Day approaches, Kitsap Economic Development Alliance executive director Bill Stewart sees reasons for optimism.

Kitsap County’s unemployment rate rose to 7.1 percent in November according to a report issued earlier this month by the state Employment Security Department, but Stewart noted that is significantly less than the state average, which remained at 9.2 percent.

The county’s seasonally adjusted jobless rate was a revised 7 percent in October.

“Our unemployment rate has been holding pretty steady at just above 7 percent,” said Stewart, adding that his organization was founded in the 1980s under an initiative by then-Gov. Booth Gardner to designate a lead economic development organization in counties throughout the state. “For all the hurt that there is going on out there, we should at least feel fortunate in terms of the overall economy.”

Despite the small increase in unemployment, Elizabeth Scott, who watches the county’s economy for the state Department of Employment Security, sees some growth.

Kitsap County saw an increase of 200 non-farm jobs last month, and a net total of 100 jobs were added across the state, according to the report.

“I see the indicators pointing in a positive direction,” said Scott, adding that both the stock market and retail sales have seen gains and people are beginning to leave their jobs for more lucrative positions. “People are more optimistic. This recovery period is continuing to move forward.”

Stewart said much of the reason why Kitsap County has fared better than others is because of Naval Base Kitsap.

He estimated that military positions comprise about 60 percent of the county’s economy.

“We obviously have been bolstered by all of the Department of Defense activity here,” Stewart said. “It’s not market-driven, so in that respect it’s a bit recession proof. It certainly has been an important economic bridge for the Kitsap Peninsula.”

He also said the arrival of the USS Nimitz, which showed up earlier this month at Puget Sound Naval Shipyard, should be a financial boon to Bremerton and Port Orchard, in particular.

The Nimitz, which brought a crew of 2,700 sailors with it, was scheduled to undergo 12 months of repair and maintenance.

“I think both communities are bolstered by the presence of the Nimitz,” Stewart said. “Certainly retail is going to experience (its presence) and I suspect the rental-housing market in both Port Orchard and Bremerton will experience it.”

He said both Port Orchard and Poulsbo, which recently opened a new three-story, 30,000-square-foot city hall, have fared well in the struggling economy, but that Bainbridge Island has not done well.

“Bainbridge is having a really tough time with all of this because of its revenue mix,” Stewart said. “They don’t have a lot of retail and real estate excise taxes have always supported government. Both of those are gone and it’s really slammed them.”

One area that has experienced significant growth according to KEDA’s November report of Kitsap County Economic Indicators is new business licenses issued.

Those have grown countywide from 153 in November 2009 to 199 last month. Bremerton (44 to 274), Port Orchard (28 to 42) and Poulsbo (17 to 22) all experienced growth.

Bainbridge (21 to 15) was the only municipality that declined from a year ago.

“I think the obvious conclusion to that is a lot of folks who lost jobs went into business for themselves,” Stewart said.

According to the National Bureau of Economic Research, the U.S. recession ended in June 2009 after an 18-month slump.

Echoing the sentiments of many economists, Stewart said the country is in recovery mode but, “It’s slower than anyone would like to see.”

Based on the reports he has studied, Stewart said employment level will not reach its pre-recession numbers until 2012 or ’13.

Compared with November of 2009, there were 600 fewer jobs last month in Kitsap County.

“Overall, it’s been a slow grind,” Scott said.

Perhaps the slowest aspect of it has been the housing market. Since 1,023 new single-family residence permits were requested in Kitsap County during its 2003 peak, that number has declined nearly every year.

There have been 205 permit requests county-wide this year.

“It’s not a local problem; it’s a national problem,” Stewart said.

Locally, one of Stewart’s greatest concerns is the state Legislature, which approved a plan earlier this month to significantly reduce Washington’s $1.1 billion budget deficit.

“It hit schools really hard, it hit higher education hard and a lot of social programs hard,” Stewart said. “That has a lot of implications. It’s going to affect peoples incomes, peoples jobs. I think a lot of that hasn’t played out yet.”

One of the largest reductions was to the state’s education budget, as $208 million in federal education dollars were used for education jobs and $39.2 million was eliminated in class-size enhancements for kindergarten through fourth grade.

In the South Kitsap School District, assistant superintendent for business and support Terri Patton said those cuts mean the loss of approximately $2 million in federal “EduJobs” that district officials hoped to use for staffing in the 2011-12 school year.

“It concerns me a lot the kinds of cuts education is taking,” Stewart said. “You’re as strong as your people. When you diminish your ability to provide a quality education for your people, that’s concerning.”

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