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>> Tom Layson: For years now our annual program about the health of the Pierce County economy has been nothing but good news as employment housing, retail and downtown Tacoma all boom.

We all knew the music would eventually stop because of the economic cycle.

We had no idea it was going to be because of a global pandemic.

Tonight, a local economist talks about the impact on Pierce County, word from industry leaders about the shocking effect on employment, a bright spot in the opening of the new Tacoma Marriott downtown and Tacoma Pierce County Chamber of Commerce President and CEO Tom Pierson on the year ahead.

The health of the Pierce County economy is next on northwest NOW.

Last year at this time, the big threat to the Pierce County economy was the ongoing trade war with China and the grounding of the 737 Max.

This year, it's the coronavirus; and it has resulted in one of the worst disasters in American history with 400,000 dead, millions of unemployed and a vaccine that just cannot seem to find its way into people's arms.

Every year the Tacoma Pierce County Chamber of Commerce holds its Horizons Breakfast Event that features a report on the Pierce County Economic index or PCEI.

I help present the PCEI with economist Neil Johnson, who crunches the data.

Last year, this was the PCI chart, continuing on a nice upward trend since the bottom of the Great Recession in 2009 and 2010.

All the new data will be released next Wednesday morning during the Horizons event.

And there is a surprise in the data.

It's not big enough news to make it wrong for me to hold out on you, but I just want to tell you that something interesting is going to come out of the data next week.

So for now, let's talk with Dr. Neil Johnson, who operates Sound Resource Economics and prepares the index and the associated report every year.

Dr. Johnson, thanks for coming to northwest NOW.

You're presenting your annual PCEI report next week.

Talk, though, a little bit about the process this year.

We normally try not to get buried in the process.

But this year, it must have been a nightmare trying to collect the data.

>> Dr. Johnson: Yeah.

The data, I needed more finely detailed data this year.

So we've got, you know, the government economic incentives, how that hit, the timing of that.

There's also the issue of what's going on in Pierce County versus in the state.

I've got relatively good national and state level data in terms of what's been going on, less so at the county level.

So being up and trying to read those tea leaves has been a little bit more challenging this year.

>> Tom Layson: So here's a tough question for you.

The 30,000 foot view for you.

I know you're still looking at that data -- that data and, like you said, we're going to reveal it later this month.

But when you sit back and look at it and get a feel for it in your gut of its totality, if Pierce County were an airplane, would we be climbing out?

Holding level?

In a dive?

Where are we?

>> Dr. Johnson: If you think of it as not necessarily an airplane but a glider, yeah, you know, where you're riding sort of thermal air currents, you know, I think we hit a big pocket back in April.

And you saw that with the stock market.

You saw that -- you know, the economy shut down and nonessential businesses were closed.

And since then, we've done fairly well.

You know, unemployment's not back to where -- the unemployment rate's not back down to where it -- where it was, and it's going to probably take into maybe 2022 to get there.

But I think we're climbing back out.

And once we have the vaccine distributed, it should be fine.

>> Tom Layson: One of the things that's really surprised me -- and, you know, I've said this before, but it's $100 bet I would have lost is the strength of -- the strength of the real estate market.

If somebody would have said, Tom, there's going to be a global pandemic.

People are going to be losing their jobs.

What's going to happen to real estate?

I'd say, well, it's going to crash.

Well, not so.

How do you explain that?

And what are the implications for the future as Pierce County tries to grow and be more than a bedroom community?

Are there implications there for the future?

>> Dr. Johnson: Well, yeah.

The housing market sort of stopped.

If you look at the day it in terms of, like, sales, there was like a one- or two-month pause.

But if you sort of pair that up with the sort of unemployment data also, unemployment shot up for a short period of time, then came back down.

And I think there was a lot of people sort of held their breath.

Potential homebuyers held their breath, and certainly home sellers held their breath.

And I think -- you know, once things sort of passed and became clear that this is going to be temporary, and that a lot of people were actually able to go back to work, not necessarily full time, housing market was fine.

It also helps that, you know, Pierce County's housing market was fairly, you know, robust going into this.

And I think it's going to be fine.

>> Tom Layson: This question gestures at this next thing I want to hit you on.

We've heard of this sort of tale of two cities or tale of two Americas where one side is doing, okay.

They're knowledge workers.

They're able to keep their jobs and keep things going and don't even have the opportunity to spend their excess money.

And then another side where millions of Americans are really -- are really hurting.

Any mega trends emerge from this?

It really seems like education and being a knowledge worker once again has proven to be the winning ticket.

What does that say about workforce and some of the things I know that you focused on and thought about over time?

>> Dr. Johnson: There's certainly something to be said for what -- what type of worker you are.

Now, whether that alters whether Pierce County is a bedroom community or not, I don't know.

King County's doing great now.

I mean, they're back down into the 4 to 5% unemployment rate.

You know, and to the extent that Pierce County can attract workers that are those knowledge workers, then that would be great.

But I think in terms of the existing population, we still have problems going forward in terms of, you know, matching up skill levels with jobs.

>> Tom Layson: And I was going to say, does this -- does this help bring that into balance where the shortage we've typically had of skilled workers now is matching a little better the reduced availability of work?

Or is that structural misbalance still there, and it's going to come back once things start rolling again or maybe even get worse with all the pent up demand?

How do you -- I can talk myself into several scenarios there.

What do you think?

>> Dr. Johnson: Yeah.

I think it's a -- it's more of a demand side issue right now.

I think once the demand's back, those issues are still there.

They're not going to go away.

I don't know that would they would necessarily be any worse.

I think it's going to take a while for businesses to sort of get back to whatever their full employee contingent was.

They may have actually found during the pandemic that, if they scaled back, they actually did okay.

And so to get back up to where they were hiring before may take some time, and that feeds back into whether there was sort of this labor shortage or not.

But I don't see that going away long term.

>> Tom Layson: I want to talk to you, too, about commercial activity.

You look at a number of different things, port activity and you mentioned building permits.

What is going on in the business community when it comes to construction?

I've heard that the commercial side is really hurting.

There's not much going on in some sectors.

So we've talked about the personal side a little bit, people's personal incomes, real estate and those things.

What's going on in the commercial side?

What should -- What do people need to know?

>> Dr. Johnson: Well, so the most volatile sort of commercial side would be the construction industry.

And when I look at the dollar value sort of captured in building permits, that still looks okay.

There -- you know, if I would -- if we didn't have this pandemic, my forecast for that would be maybe a slight cooling in that sector by the end of 2021.

But when I go -- that's based upon sort of this long lag between building permits and actual sort of, you know, rolling out that particular work.

The more recent building permits data sort of suggests that that trend is going back up.

So I think once we get to, say, the end of 2021 into 2022, you have both the sort of work that would have been done 2020, early 2021 coming back, as well as what's sort of embodied in that -- in the current building permits that are coming out.

So I think that's going to be -- should be okay, but it may take until 2022.

>> Tom Layson: I was going to say, I don't want to put words into your mouth but our last question here: You sound optimistic or like you have the emotional capacity to be optimistic if things go right.

And I know your study takes the emotions out of it.

But so you're thinking 2021, '22, do you feel pretty good about where Pierce County might be heading once the vaccine gets rolled out?

>> Dr. Johnson: Yeah.

And I think the critical thing is getting that vaccine rolled out.

I think the first half -- the first two weeks first, yeah, first half of January has been slow.

It's been disappointing.

Really disappointing.

And I think if they can get the bugs worked out and get that rolled out, you know, the sooner the better.

And my forecast sort of expects that to not really happen until into the third, maybe early fourth quarter.

>> Tom Layson: For average people, one of the data points that really matters is the unemployment rate.

Looking back at the last complete set of numbers, in November, we were sitting at 6% unemployment statewide.

While that's a little better than the national rate of 6.7%, here in Pierce County, that rate was sitting at about 7.5%.

Also part of the program next week is a panel discussion I did with MultiCare CEO Bill Robertson, local builder Dan Absher and the Washington State Hospitality Association's Anthony Anton who says, when you look at the categories that took the biggest hit this past year, his members industry's -- accommodation, food service and leisure and hospitality all ranked among the hardest hit.

>> Mr. Anton: It's tough.

And there's -- the different sides of our industries are a little bit different.

Quick service is different than the full service and hotel industry.

And -- but those two sides of the industry and the entertainment side of our industry is devastated.

Employment is down probably -- I haven't seen December numbers yet, but my estimate will be over a couple hundred thousand people will be unemployed or not working in the industry over year.

And, you know, as of October before these latest [inaudible], we'd already lost 2000 businesses permanently.

>> Tom Layson: Now, there are a few good things going on out there.

And as northwest NOW contributor Michael Ziack [phonetic] reports, one of them was the November opening of the brand new Tacoma Marriott downtown, tied directly to the convention center.

>>Michael Ziack: Having a luxury hotel tied to the convention center was always the dream.

And when the Marriott Tacoma Downtown opened last November, that dream was finally realized.

>> Mr. Osgood: Well, the hotel itself is 23 stories and six stories on the podium.

That's the base of the hotel.

We have two floors of meeting space with a ballroom that's over 10,000 square feet, as well as a rooftop deck with about 6,000 square feet.

We have a pool, hot tub, beautiful fitness center with views of Rainier, a restaurant.

Our great room here has a full bar program and an excellent food menu, breakfast, lunch and dinner.

And then we also have a state of the art M Club that's one of the best in the company.

Out of 360 hotels, we have the largest M Club in the business.

I think it's going to provide an additional venue to hold meetings and trainings and events.

So I think it's going to be a benefit to downtown Tacoma and its businesses and surrounding areas as well.

>>Michael Ziack: But the coronavirus pandemic has been a nightmare for the hospitality sector.

And the Marriott is no exception, having opened right in the middle of it.

>> Mr. Osgood: So COVID has drastically impacted the Marriott Tacoma Downtown, but it hasn't stopped us from opening.

Had to alter pretty much every phase of our business, our restaurant and how we operate the cleaning of the guest rooms.

Marriott has a program called Commitment to Clean, and it's our way of taking care of our guests and showing our commitment to making sure that all aspects of the hotel are clean.

So we are doing everything we possibly can to ensure the safety of our guests.

>>Michael Ziack: Despite the cancellation of events and most travel, Osgood says he remains hopeful about the future and the role this new facility can play in the revitalization of downtown Tacoma and the competitiveness of Pierce County.

>> Mr. Osgood: Overall, business is down about 90%.

So we've seen a drastic reduction in our core business, which is groups and business travel.

But so far we're getting through on our retail segments and our third-party segments with a little group sprinkled in here and there.

The hotel and restaurant industry was hit the hardest out of any industry in COVID.

We've had to layoff 90% of our staff, and we still haven't rehired, you know, a good chunk of those folks.

But I think overall the future looks bright.

Stuff is starting to come back.

We're starting to see consumer confidence come back.

And I think we'll be able to fill our hotel rooms by the end of 2021.

We just need to get past this initial phase here.

So Tacoma is open.

The downtown is open.

There's restaurants that are open downtown that are still doing grab and go just like we are.

And I would encourage people to get down here and support our local businesses.

>>Michael Ziack: So for now, it's hurry up and wait for the hotel and its staff, waiting for the widespread distribution of the coronavirus vaccine and what they hope will be a thriving downtown hotel and convention scene once COVID is behind us.

For northwest NOW, I'm Michael Ziack reporting.

>> Tom Layson: One of the regular fixtures at the Horizons Breakfast is Chamber CEO and President Tom Pierson, who joins us now to talk more about the Tacoma Pierce County economy.

Tom, thanks so much for coming to northwest NOW.

You do this program with me every year, but I have to tell you we probably have never done a program like this one.

After a year, basically of a global pandemic ripping through the economy.

So let me start with this.

It really seems like the national retailers and the national chains are going to come through this with flying colors.

But the local businesses, the folks you deal with are really paying the price.

Is that narrative true?

And what are you seeing out there?

>> Mr. Pierson: Yeah.

I think that's -- you know, if you think about just how -- how do you shop during this pandemic, right?

So you use Amazon, use some other national -- as you said, some national retailers.

And we've been really pushing hard, especially, you know, prior to the holiday season and coming through the holiday season.

How do you get your local -- make sure you get buy local?

And most of those local, you know, shops, they don't have a great online presence or portals.

And so we did a big effort to make sure that we push that because, you know, that's a ton of sales that they're missing just by, you know, you and I shown up to their shops.

But we all want our South Sound garb, so that's the big push is making sure you're getting local, buy local.

But they are going to be hurt.

>> Tom Layson: Well, Tom, for a couple of years now, we've talked about how great Pierce County was doing.

The population was growing.

Jobs were coming to the area.

And the dream of being more than a bedroom community to King County and Seattle seemed like it might come true.

What are your thoughts about that now?

And I can see a downside to all this, maybe not countering that trend.

But then there's also the advent of remote work in a realistic way.

So help me interpret that.

How do you see things going?

>> Mr. Pierson: Yeah.

Absolutely.

I think, you know, just all the activities that are happening and in other regions and major metropolitans, when you -- when you listen to folks who are trying to locate businesses, they're looking to secondary cities.

They're looking to cities like Tacoma.

Tacoma is one of the top cities that businesses are looking to locate.

So why is that?

And housing is part of that.

So getting -- you know, people are moving here because they get more space.

They get more value for their dollar.

At the same time, they can be in an office space.

People aren't going to be necessarily in an office space full time like the way they used to be, but they could still be in an office space, you know, Monday, Wednesday, Tuesday, Thursday, whatever that looks like.

But they -- they'd be closer to their community, not necessarily need to sit on I5 like we used to.

>> Tom Layson: Does the search by employers and the relocation of businesses, for a while when we do this program to be like, Hey.

Brass Pro Shops came.

They're building a downtown Marriott.

It was thing after thing after thing.

Did that kind of stop in 2020?

Have any businesses come?

Has any employment increased?

Or we've been on hold?

Give me a feel for that.

>> Mr. Pierson: Yeah.

I think -- I mean, employment's all over the board, right?

So, I mean, if you're in the restaurant, you know, sector, employment is, you know, upside down.

But people are -- again, what we're seeing is that, if you look at some major national -- national, you know, I'm thinking about a national retailer who was going to locate their headquarters in Bellevue.

Their employees want them to be closer to home.

So they're going to be looking at a model where they have a location in South Sound.

And so that's what we're hearing more about is businesses not having that big national headquarters, so to speak, but having some more hubs that are in towns like Tacoma, like the South Sound.

>> Tom Layson: I'm not going to force you to spill the beans there.

But you're on the verge of breaking some news, I think, about a nice move into the South Sound by an employer, which, of course, is always -- is always great.

You mentioned also the real estate market.

I have to tell you.

If somebody would have, you know, made me $100 bet and said, Hey, there's going to be a global pandemic.

The economy's -- half the economy is going to be shut down.

Things are going to be terrible.

What do you think the real estate market is going to do?

I would have said, Man.

It's going to crash.

But no, it hasn't.

Maybe give me a little more detail on that.

How do you -- how do you explain that?

And how does that bode for the future of Pierce County?

>> Mr. Pierson: Yeah.

I think -- I mean, I think you have multiple factors here, right?

So you have interest rates that are at historic lows.

And so getting into a home, you know, is a whole different perspective than it was even, you know, five years ago.

And they continue to be low.

We always thought that they were -- they're just about to go up, and people have refinanced and other things.

And so that's one aspect.

The other aspect is what I spoke about before in terms of I think people are selling for good values out of -- of north of King County and other regions coming here, getting a better value.

And so that's helping drive those up.

Commercial real estate, by the way, you know, which we've been kind of watching and concerned about because, as what does the new office space look like, what does that mean to our retailers?

And, you know, we've gotten several purchases in the downtown during this pandemic.

>> Tom Layson: Give me a sense, too, if you would.

I know you talk to businesses of many sizes, large to small.

With some of the small businesses, there's some real pain happening out there, isn't there?

There are life savings that are on the line here.

There are multi-generational families who've been running a restaurant or a tavern or whatever it may be.

It's not all in the food service industry.

But there are people some -- losing their stuff out there, aren't there?

>> Mr. Pierson: Absolutely.

I mean, that's what -- I mean, this economy is -- I mean, there's winners and losers.

There's -- there's different sectors in this community, they're just through the roof in terms of, you know, doing great work and adding employment.

I was just on a call earlier where there's -- you know, they're searching for new employees.

But, again, as we spoke before, you get into the restaurant hospitality sector and, you know, you're talking about, you know, statewide, we're talking about 45% of our restaurants will close, you know, sometime here that by -- through 2020 into 2021.

Yet, we've seen here in Tacoma there's some great new restaurants that have opened.

>> Tom Layson: Talk a little bit, too, about the role of PPP, the Paycheck Protection Program, some of the other stimulus that may be coming.

What resources does the Chamber make available for small businesses to listen in on your weekly seminars about navigating these things?

There's a level of complexity, obviously, we're not going to get into on this show.

But I know small business owners just get out -- don't just get on the phone and get help.

It's very complex.

And there's lots of things to think about.

What are some of the resources people can avail themselves of?

>> Mr. Pierson: Yeah.

I mean, well, one, just the PPP.

I mean, great.

Congress finally passed this.

This has been something that we've been wanting and asking for, for a number of months.

And so I think this is going to help us into the first quarter of 2021 is getting people the second round of PPP, as well as some businesses haven't got their first round in yet.

So that's going to be helpful.

We do a weekly phone call to businesses, to make sure that -- and we bring in experts, you know, whether it's members of Congress, SBA, you know, folks from employment securities to be able to answer questions directly.

And if we can't get them the answers, we connect them up.

And that's been very helpful.

We get people from South Sound.

We get people from Eastern Washington.

Got some farmers calling in.

You name it.

We've been breaking news on those at times, but it's also been very helpful to get answers because it's hard during the pandemic.

How do we get this face to face?

How do we get my answer?

You get into some long list of voicemails, that doesn't help you.

>> Tom Layson: Yeah.

And there's a lot of complexity from tax planning and all kinds of things that go along with that, that I'm sure small business owners can use some help with.

I'm going to ask you a tough question because it's basically asking you to prognosticate and read the tea leaves based on a gut feeling.

So I understand this isn't scientific.

But, you know, Pierce is always kind of the first to fade in a downturn and the last to come back in an upturn when you look at the three major Western Washington counties.

With that said, what's your prediction for 2021?

Do you feel like we -- the groundwork is there for us to accelerate nicely if the vaccine program gets going?

What are your thoughts?

>> Mr. Pierson: Yeah.

Actually, I think that that -- that old pathway is going to change.

And if you think about it from an equity inclusion standpoint, think about the work that we've been already doing in South Sound, you know, just all these pieces that we've been putting together, I think really attracts people to be here and businesses to be here.

And so I think that's going to change because, again, going back to my earlier comments, Tacoma, Pierce County, it's the place to do business.

It's where people want to be.

And it feels -- you know, it's home.

And it's home to business.

It's home to individuals.

And it's a place that people feel community.

And I think that's really going to matter as we come out of this pandemic.

The vaccine piece is -- we've we got to get these vaccines into arms, and the fact that we've had vaccines expire is just beyond frustrating.

And so working through all those processes.

We've got leadership in Pierce County that really understand and trust and work together with each other.

So I think we can figure it out.

The other thing, Tom, just really quick, if you think about our for -- you know, our higher ed, you'd have Tacoma and other, you know, education facilities.

UW Tacoma has actually been sought after.

Their admissions are higher than the autumn admissions because they've been adaptive.

And I think if you look at Pierce College or other community college -- or other two-year institutions and technical, they're adapting to the economy quicker than some more traditional.

And so I think that's another huge opportunity for us as we start to build out this.

>> Tom Layson: Last question for you.

Is there still time for folks to participate in the annual Horizons Breakfast, albeit virtual this year?

And, if so, what do they need to do?

Where can they go to learn more?

>> Mr. Pierson: Yeah.

That's one nice thing about online.

We can have as many people as you want to come.

So register at tacomachamber.org.

The event is Wednesday, January 27.

So we have a couple -- we have some time here, a few days.

So get registered.

We'll take a registration, and it's going to be a great event.

We've got a huge list of folks to really get you dialed in to understanding 2021 because it's still going to be a little rocky, but I think we do see some light at the end of the tunnel.

>> Tom Layson: The annual Horizons Breakfast is packed with a lot of interesting information and some good analysis from a list of local speakers.

Let's face it.

2021 could be a pretty good year.

It all really depends, though, on whether the federal and the state governments can pull themselves together in time to get the vaccination rolled out so that it's not overwhelmed by an increasing infection rate.

I hope this program got you thinking and talking.

To watch this program again or to share with others, it streams on our website at kbtc.org.

And, as always, be sure to follow us on social media @northwest NOW.

Thanks for taking a closer look on this edition of northwest NOW.

Until next time, I'm Tom Layson.

Thanks for watching.