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All the major economic indicators for Tacoma and Pierce County appear to be flat or maybe headed down.

But considering all the chaos with trade and policy, maybe that isn't so bad.

Tonight we preview the Tacoma Pierce County Chamber of Commerce's annual Horizons Breakfast with a panel of people whose job it is to keep tabs on the local economy.

And our Steve begins with the story of a little good news.

As the University of Washington Tacoma moves ahead with big plans to upgrade the downtown campus.

Our annual look at the Tacoma Pierce County economy is next on northwest.

Now.

Music Business Insider's most recent survey of the state shows that Washington State ranks 46th for affordability.

Developers will tell you that regulation has made housing development extremely difficult, keeping rents high and inventory low, and just about everybody will be touched in one way or another by tariffs and state and local government's recent round of tax increases, with more being discussed right now.

As of this fall, the unemployment rate in Pierce County was 4.6%, a bit higher than the statewide average.

And the U.S., with population and wage growth both stalling a bit despite a fall off in overseas trade, the industrial vacancy rate was a relatively low 3.9%.

On the consumer facing side, several large multifamily housing developments in Tacoma have fallen through.

One of the great strengths of the Tacoma Pierce County economy over the years has been the University of Washington Tacoma.

As Steve Kiggins tells us, a major new expansion is about to get underway that will transform you from a commuter to a more residential campus.

have to come in first opened its doors back in 1990.

Ever since, they've handed out 35,000 degrees and certificates.

By late 2029, the University of Washington Tacoma hopes to complete a construction project, expands our campus, and will add on campus dining and on campus housing for 500 students.

It's a project the City of Tacoma hopes will attract even more development in 35 years.

We've gone from being in an office building downtown here on Park Avenue to now this 26 acre campus.

The campus hosted more than 5000 students last year.

The university's long term vision includes increasing enrollment to 10,000 U-dub Tacoma already supports thousands of jobs, and in 2023 generated nearly $360 million into our state's economy, contributing to the economic development of the region.

But we're also just contributing to the vitality of the region by making sure that we have all of the talent that we need to make a city vibrant.

You know, unity is is definitely an anchor institution in the Tacoma economy.

The city of Tacoma, the Department of Community and Economic Development, says the planned expansion will only make it easier to attract new investment.

It's really transforming the cityscape.

You know, it's transforming the economy and it's transforming the culture not only in downtown but, you know, throughout the city you love to come is expansion is cornerstone to its campus master plan, aimed at transforming a commuter campus into an always open environment where student housing and dining becomes more than just buildings.

Growing spaces that build belonging, that meets the needs for the next generation's workforce.

A number of jobs that require some kind of post-secondary credential.

Not necessarily a four year traditional liberal arts degree, but some kind of post-secondary credential in this state is over 70% of those jobs require some kind of post-secondary credential.

So higher education has a vital role to play in this state.

And Tacoma Steve Higgins, northwest now.

Coming up on Wednesday of next week is the Tacoma Pierce Chamber of Commerce's annual Horizons Breakfast, where local business and government leaders preview the year ahead.

And I help present the Pierce County Economic Index with UPS economics professor Andrew Monaco.

It's a great event, and tickets are still available through the chamber's website at Tacoma chamber.org.

Joining us now are Tom Pearson, returning for a stint as the interim CEO of the Tacoma Pierce County Chamber of Commerce.

Barry Bob Blitz, the director of economic development for Pierce County and Department of Economics chair at the University of Puget Sound.

Andrew Monaco, Welcome everybody to northwest.

Now great to have our annual conversation about the state of the economy.

And Tacoma and Pierce County.

And every year we take a look at the data and also some of the qualitative pieces that go along with it in advance of next week's horizons breakfast at the Chamber of Commerce.

Tickets still available.

So that's going to be a great event, as it always is.

Tom, I want to start with you.

You're out there talking to businesses.

What are local businesses and market participants telling you about?

Kind of, you know, how it's going?

Yeah, I mean, it's it's tough out there.

I can tell you, you know, in terms of you just have additional cost, you know, whether it's labor or whether it's individual cost of goods and so forth.

I mean, consumers are still spending.

That's the good news.

But it's getting tight out there.

And for instance, you know, our restaurants are running on about 1.5% margins.

That's not a lot of money.

You probably make more money, you know, serving than you are actually owning a restaurant this point.

Or I would say just investing in a bond.

I mean, that's the problem when it comes to startups and economic dynamism.

I'm I'm going to make 1.5%.

Are my just going to become an investor now?

Yeah.

And the risk you have with that.

Yeah.

Exactly.

Betty.

So things are tightening up a little bit.

According to Tom.

That's kind of his take on things.

You're out there trying to sell Pierce County.

Hey, come here to Pierce County.

Do all these great things, have things ground to a halt?

Is there some motion out there?

Give me a sense of what's life or what life's like in your world.

Well, there is motion out there, but as you know, we talk every year.

Economic development is like a long term game play.

And it's a team sport.

With that.

So a great example.

This last year, we took about three years to recruit and in partnership with the EDB, a Japanese company, and they're coming into Fred.

310 okay.

And Fred, 310 I think we talked about in 2022, that was an old Boeing property, the 310 acres and all that infrastructure is already, in place for that whole for the master plan and for the six buildings are in there.

Everyone thought it was going to be warehouse logistics.

This is an advanced manufacturing firm that's going into that facility.

So it's it's a nice trend to see that that, things are changing and you can repurpose some of those spaces.

So we're pretty excited about that.

Refresh my memory.

What's the location on that?

I know the name Frederick.

It's Frederick.

It's an old Boeing, property that they did not use.

So they surplus 310 acres, but it's in the complex.

It's in the complex, right.

Okay, so it's been a nice addition and really so that's a pretty fast track to have those.

And four of those buildings are already filled.

So and they're household names and they're doing really great stuff.

So I think there's optimism there.

It just takes a while.

Any big company, it takes a long time before they move.

And we just want to make sure our local companies grow and stay here too.

Right.

Andrew, you and I will be, working together to present the PCI, the Pierce County Economic Index, which we report every year.

And we can kind of see how things are going.

I want to start, though, take me to your econ 101 class or consumer 101, if you would.

I'm back to being a freshman.

If I had to go to UPS.

This is a loot making fun of you.

But, what is this k-shaped economy we keep hearing about?

We know about the wealth gap, but it really seems like there's kind of a tale of two cities almost in not only just Tacoma Pierce, but around the country as well.

Yeah.

If you picture that letter K that has one line trending upward and the other trending downward, right?

That K-shaped economy is telling a narrative that, household experiences are very different, whether you're at the, high end of the distribution versus the lower middle income end of that distribution.

So when it comes to looking at, just an overall indicator like, you know, sales numbers for Pierce County, even if the average number looks strong, it might be hiding some of those different experiences between where that spending is actually coming from.

Is it high income households in the low income households maybe aren't getting that same experience.

So I'm glad you mentioned that, because it's good to bear in mind as we talk about the next thing.

And since I've got you, I'm going to circle right back to you to talk about PCI.

What are some of the hard data findings in the PCI that you're seeing this year?

We're looking at shipping data, key indicators like income, car sales.

The real data that you're seeing that allows you to maybe read the tea leaves a little for 2026.

Yeah.

I mean, there's so much we look at when we put the Pierce County Economic Index together because there's tons of different indicators.

And of course an economy is a complex things.

We want to look at a lot of different data points.

Some of the broad economic indicators are relatively flat.

So things like Pierce County retail sales have been flat 25 compared to the 2024.

State growth is doing okay, but it's lagging a little bit compared to where it was last year.

So we have some flat indicators and, some of those data points, but there are also some concerning, little warning signs and what economists call leading indicators.

So these these are the things that give you a little bit of a heads up about what's to come in the next year.

So, construction sales in the county are down 7%.

Building permits in Seattle, Tacoma combined are down double digit percent from year to year.

So we're seeing a little bit of that in the data as well.

When we look at the, Northwest Seaport Alliance, which covers port, it's out and Port of Seattle.

The year started off strong, but actually over the course of 2025, now shipping estimates for this year are down 3% compared to last year.

Auto, shipping coming in is down almost 20% this year compared to last year.

So we're seeing a little bit of, just some drag going on, especially as 2025 has evolved.

Okay.

Just for the record, I want to make sure that I state that the PCI is a Tacoma Pierce Chamber of Commerce property.

You guys commission that.

It's your study.

Talked about the data piece.

I want to talk about the qualitative piece.

Tom, whenever you talk to business owners about tariffs and things, the word that kind of keeps coming up is, you know, reliability or certainty.

Why is it why is it so important that a business have I know you're taking me to one on one here as well.

Why is certainty matter?

Why do business owners keep complaining about certainty and what makes things like crazy?

Tariffs going up and down and not knowing what your supply chain is going to look like?

Why does that make it so difficult to run a business.

Yeah I mean it's it's it's dependability.

Right.

It's dependability in terms of price terms, prices that you set for your consumers.

And it's about your supply, you know, the supplies coming in.

And so where where are you going to get them from at what price and so forth.

I mean, you also have the fed rate, right?

So that all those things affect business.

And the uncertainty builds.

And so it builds.

A lot of times what we're seeing is that pressure is building.

Right.

If you have these tariffs, you know, are you where are you getting your products from.

Is it China's.

It Vietnam is it's, you know, locally sourced or other things.

And and those are the issues that really are facing.

I want to hit you with this too.

One of the things the Chamber of Commerce is here for is to help businesses, to assist them to navigate these things, figure it out in a something like this.

How do you help them?

Yeah, I mean, it's tough.

I mean it's you know, obviously we're you know, we're we're advocating in terms of a lot of this work.

But it's it's, you know, I mean, for me, it's also you're looking at your manufacturing side and other pieces that how can we offset some of this stuff.

And I think that we have some opportunities and we could switch to what, what opportunities we have.

And I think manufacturing is an opportunity.

But we need to incentivize, and that's where I think we come down to.

And, and we can pivot into like housing and some other things.

But we have a great example of how we incentivize a sector.

It was our data set, data centers.

And we have a great data center here in Washington state and in the South.

Sound.

We incentivize them.

They were nearly empty.

Now they're at capacity looking to double their footprint.

Why?

Because the incentives help bring those jobs back into Washington.

So those are tax policy incentives, tax policy incentives.

And that's what we need to see.

The legislature as well as, you know, I mean, locally we have some.

But really at the legislature, we'll talk about the legislature in a minute.

I have a feeling it's going the other direction.

Just, just we'll preview that a little bit.

We'll see you talk a little bit about uncertainty too.

How does that when again, your job is out there building these relationships, like you mentioned over time, trying to talk about to come and Pierce County and all the great things.

But if there's so much uncertainty, how does that affect your message and what can you do to, you know, every salesperson has to be able to overcome objections.

How do you go about doing that?

Well, as Tom mentioned, some of the current uncertainties, but I would kind of challenge everyone.

Businesses have always had uncertainty.

That's been throughout time and really innovative businesses and figure out how do they work around it.

Where do they come up?

Is there a gap?

Is there a new opportunity?

So I feel like that's really around the entrepreneurial marketplace, and to hear and get the information for, like the chamber and other resources and then craft your business based on those pieces.

So that that's a key piece.

The other one I wanted to add in that I thought was really fascinating that Gen Z, they say that's the largest consumer base in our marketplace, in any marketplace globally and the wealthiest.

So they're buying patterns.

If you are consumer based company, they may want things differently than I may want things.

And so your product, whether it be furniture or anything else, might have to be tailored around that.

I think for the county, what we're trying to do is look at those cycles.

And so we know Boeing has seven year cycle.

So we're really excited because 2026 looks like it's going to be a great year for us.

And we have a lot of people in the supply chain for Boeing and and advanced manufacturing.

So we're excited there.

But also during the pandemic we took the opportunity to try to add resiliency.

And so we did the, Pierce County Business Accelerator with the chamber.

Yeah, we launched 578 businesses.

So if they only have their self as an employee, that's that's a lot of major companies, launched in that that space.

And that's so important trying to grow your own because one of them, you know, everybody wants to be the next Nvidia.

But you know you might get one right.

You don't you're if you're not in the game you're not going to get one.

And about a year ago we did a survey 90% were still in business that we helped them raise over $10 million of capital to grow their companies.

And then we also developed a network with our, navigators that go out to business communities that may have been underrepresented.

And we work with Black Collective Cream Women's Association, Asia Pacific Cultural Center Centro, and they did 3501 on one visits with businesses.

And the whole goal is to let them know where the networks are, how to how to get information so they can be more successful.

So we're hoping building that base then helps them survive any kind of uncertainty that happens in the marketplace.

We want to shift over to affordability.

And Andrew, you gave us the preview a little bit about what's going on with permitting on the way down, construction spending possibly flat or on the way down, that directly impinges on affordability.

Take me again.

Maybe the 201 class, for some supply and demand on on housing and on affordability when supply is being constrained.

Yeah.

I mean, it's it's interesting to look at the data about regional cost of living.

And in the last couple of years, the Seattle Tacoma region has actually surpassed the New York City metropolitan area and the San Francisco metropolitan area.

That something the second most expensive place to live in the country.

So, there are reasons for that, right?

When you have a lot of people who are interested in moving to an area, we live in a beautiful part of the country that has a lot of opportunity.

So you get a lot of those folks moving to the area.

And that, increases demand for stuff, which just sort of nudges those prices up a little bit.

And we do see it really sharply in housing, Pierce County housing Affordability Index, dropped a bit right after the pandemic, and it's been sort of stuck there for a little while.

So, that does make things challenging when you just have a lot of people chasing fewer goods and services that are out there.

Affordability is really looking to me like it's going to shape up to be one of the real buzzwords in the upcoming election cycle here, not only in the midterms, in 26, but also for the presidential next time around.

You know, and Betty brought up this generational piece, people in younger generations struggling with affordability.

Tom, talk a little bit about that.

In the sense of do you get the sense that businesses are kind of at the end of their proverbial rope when it comes to affordability in terms of trying to be able to attract people, keep people, keep people?

We talked about this every year from jumping on 167 and driving up to Bellevue to get a job that will help them afford the things, even in Pierce County here now that are expensive.

Give me your sense of that.

Yeah.

I mean, there's it's kind of a complex.

I know there's a lot, but.

And I could go to a bunch of different ways.

I mean, in an economy like this, yes, businesses are clean.

They're a place where they, you know, do no harm.

Is is really what we're asking.

Everyone is do no harm.

But it's also, you know, you look at the middle class or, you know, look at our, you know, workers and they're, they're struggling as well.

I mean, and so I think, you know, I think there is, an issue.

But it's also a time, as Betty talked about, you know, really working on this foundation in terms of businesses.

It's a time when when we're kind of coming down a little bit is a time when people start new businesses.

And so I think having this infrastructure in place that Betty's talked about is, is key, because as you're we have more people starting businesses.

I think we have the infrastructure to support it better than any other community in this, in this state.

And so that foundation has played really well through the pandemic and through this last couple of years.

And so, so I'm excited about that as well.

I mean, it's is it where we want to be.

No.

And I but I also think to the affordability, people want to live here.

They want to live in Pierce County.

They want to live in Tacoma and in this region for a reason.

And that's why we see that.

Do you get to talk to many people who are in start up phase, or does it take them a while to get successful?

Then they join the chamber, then you talk to them, or do you get to talk to startup people?

And I'm just wondering if you've had any conversations you thought were illuminating?

Yeah.

I mean, I talk to all sorts of folks and so it's all the way in there.

I mean, obviously the startup folks, I mean, they're I mean, they're thinking about a lot of things, but they're and it's a tough time to start as well.

But but I think it's the optimism of those folks.

I mean, they see the world, we think about the creative economy that we have and creative economies goes beyond, a lot of places you can go to in a manufacturing and going to other, other places.

And we have that here.

And I think those they're the ones that inspire others, they're excited, but they have a niche in this market.

Is that what they're trying to capitalize on?

Yeah.

Betty, talking to you, I want to give you a chance on affordability too, that like the reliability and supply chains and all the other things we talked about is another important piece of what a company has to consider if they want to move here, if it, you know, the CEO may want to come live in Seattle Tacoma.

But if his minions can't buy a house here, it's not going to work.

So what is do you ever run into that or do you have those discussions?

Talk a little bit about the affordability pieces.

You see it.

So that's that's a huge piece.

One thing the county has just recently done is we've redone our comprehensive plan and looking at incentives and changes that, really trying to focus on how to fill the housing gap in affordability.

And there's a whole compendium of of that gap, but focusing a lot on the middle market housing.

And so they've done some rezoning, some density changes, some incentives, and we're putting together a network to try to attract development into those pockets.

That would do, you know, duplexes, you know, four plex is five plex is so, so not necessarily the big apartments, having them on high capacity corridors, being able to have ADUs.

So trying to find ways to make affordability work.

And if they're in that high transit corridor, then that help the infrastructure is there.

So it helps with all those extra costs.

So you don't have to bring in.

So trying to focus on those pieces.

Our permitting department also in the end of business and business affordability, has been working to try to streamline the process.

So you can go online and see videos to how to do it, to know how to apply, all of those pieces to try to make it faster, quicker, more dependable so you can make a good business decision.

I'm glad you mentioned that, because, you know, I'm constantly hearing about the permitting issues in Tacoma.

Pierce have for a long time and it's just a drum that keeps getting beat.

And I keep saying to myself, well, certainly at some point they have to fix this.

They have to hear this and and things have to change.

And it sounds like you feel like there's an effort underway, maybe under the Melo administration to get that done.

There's a huge effort underway for that.

And some of our other towns and cities in Pierce County are also working on that, because they realize that's something you can do locally.

So whatever you can do locally, I think it's a big impact to help on affordability because we do have a great talent pool.

We want them working here.

So that's the other half of bringing the jobs here, selling to our strengths and our advantages so we can get those new jobs of the future that are great paying jobs.

So the talent stays here and can live here.

Andrew, I noticed you nodding your head vigorously.

I'm not sure which piece you were not so well.

Feel free to fire away.

I mean the like it's important for us to do what we can at the county level.

But of course, we're sort of fighting upstream with this federal level stuff.

You're talking about the fed and interest rates and part of what starts the whole housing back.

I said interest rates are still relatively high.

And in this sort of high uncertainty environment, I mean, it's a little bit unusual for, you know, the fed to make decisions like they did last week.

And there's a sense in both directions, some folks on the board want interest rates to come down faster.

Other folks don't want them to budge at all because they're concerned about inflation.

And so, you know, you have a lot of folks that locked in a really low rate, over the pandemic.

And so they're not looking to move any time now.

They're stuck.

So, so it's keeping the supply from turning over a little bit.

And of course, like the fed always is in this position of oh, we can drop rates to kind of help that affordability issue there.

But then we're worried about the inflation angle.

Right.

And cost of living is already an issue.

It's inflation's above the fed target at the national level.

So it's a little bit of this delicate balancing act that they're that they're trying to tackle.

And so that's part of where that uncertainty comes from.

Again where we go okay.

Like we don't know what interest rates are going to be.

So how do you make a big borrowing decision if you don't know what you could be paying to to put that thing back?

Am I going to go in deep on a loan to do this thing?

Yeah.

Yeah, exactly.

And in some of these, affordability pieces on the lower end, the starter homes, we're starting to see some private foundations, maybe having some philanthropic, giving to help a piece.

It could be a down payment.

And those are just things we're seeing starting to emerge.

Don't know if they'll be in our marketplace or not, but but I think that's that's that entrepreneurial.

How do you feel gaps.

How do you how do you how do you help make it all work together?

Yeah.

I'm going to read some, Tom notes here.

Tom Larsen not, not the Tacoma Chamber.

Tom.

You know, I'm sure you know, my concerns will come out as I read these notes about policy going forward.

Here.

Tacoma is up property taxes and now may increase sales tax.

Legislature passed the biggest tax hike in state history last year, many on business.

The new proposals emerge this year for a business tax on middle class jobs.

The latest numbers show a $1.5 billion deficit this biennium and a $4 billion deficit in the next biennium just to maintain the status quo.

So I have read the tea leaves for you.

I'm sure you do, too, Tom.

Lawmakers, if you do watch this program, this is your chance here in our last three minutes to talk to him.

Better you two about policy.

What do you want out of the legislature?

And I think I think your your initial comment at first do no harm.

Like the Hippocratic oath for a doctor, I think is insightful.

Talk a little bit about what you want to see and don't want to see coming out of the legislature.

Yeah, absolutely.

I mean, I think you talked about manufacturing clean, clean energy.

We talk about housing, but we're not incentivizing those to the point that we're actually getting that.

And so those are the to me, those are the three things that we need to be looking at.

So in an environment where we need more taxes, maybe it's a spending problem, maybe it's not a tax problem.

I'll leave you with that.

Yeah.

Well I mean, if you take a look at the spending, the spending, it is vastly outstripped inflation and population growth.

Do you think, Tom, there's a chance at some point we end up in.

And, Andrew, you could probably speak to this too, into kind of a classic death spiral where our commitment committed funds go up, population and the tax base goes down because of economic decline, which means taxes, again, have to go up to, to feed into those commitments.

Am I making this up in my head, in my in a fever dream that I'm having?

Or do you think it could happen in Washington state?

Well, I think I mean, I think it's real.

I think we need to be careful.

And that's where I think we need to be talking about how, where, where is a state of business and how delicate it is.

And, and we are on a delicate piece here.

We have some opportunities.

People want to be here, but we want to make sure we get manufacturing here, housing here, and those pieces, if that's really what we want as well.

And that's why I go back to my clean energy as well.

Then we need to make pathways to get those jobs here.

So tax credits is what you're talking about.

Absolutely targeted.

Yep.

Targeted targeted.

And that's what's going to help.

How do we get folks into home homes as well.

And that's part of the housing piece.

And there's a lot of discussion around there.

But there's not pathways that we, we are that are tangible at the moment.

Betty, I'm not asking you to be controversial.

Is there anything on the county or the Association of Counties list of things they want to see get done?

I think there's probably a huge list.

One, but one that I just want to add to since I'm coming from the economic development side.

So I agree with a lot of the things Tom mentioned, but the other pieces are aging infrastructure, and we've seen that with bridges and other things happening.

We've seen that with recent floodings.

So I think infrastructure is a piece of that maintenance.

And and how does that all work in the equation?

And how do we reevaluate and reprioritize where resources go.

And there are not enough resources to go around?

Last 30s for you, Andrew.

You know, I've said this before, and I'm going to say it again, wrapping up a program or a news story with something along the lines of only time will tell is about as lame as it gets.

The bottom line I'm afraid it's the best I've got on this one.

With so much uncertainty about the state's tax policy, trade, a possible eye bubble, inflation, and all the rest when it comes to the Tacoma Pierce economy in 2026.

Only time will tell.

My thanks to the Chamber of Commerce for the honor of participating in their annual Horizons Breakfast over these past eight years.

I hope this program got you thinking and talking.

You can find this program on the web at kbtc.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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